After termination of the All County Franchise Agreement, can I have an indirect interest in a competing business?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 23.4. Covenant Not to Compete. Upon the termination or expiration of this Agreement in accordance with its terms and conditions, including the transfer or assignment of this Agreement or any interest in the Business, you agree that, for a period of thirty-six (36) months commencing on the effective date of termination or expiration neither you nor any of your owners will have any direct or indirect interest as a disclosed or beneficial owner, investor, partner, director, officer, employee in a management or sales capacity, consultant, representative or agent or in any other capacity in any Competitive Business operating or providing services within your Territory or within 50 miles of any point on the outer perimeter of your Territory. You are prohibited from selling or transferring any of the accounts or clients of the Business to anyone except to another All County® business that has been approved in writing by us or to us or our designees.
- 23.5. Commencement by Order. If it becomes necessary to enforce the Covenant Not to Compete by court order, we will seek to enjoin competition for two years from the date of issuance of the order. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting such skills. Consequently, enforcement of the covenants made in this Article will not deprive you of your personal goodwill or ability to earn a living.
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, after the termination or expiration of the Franchise Agreement, franchisees and their owners are subject to a covenant not to compete. For a period of 36 months after the termination date, neither the franchisee nor their owners can have any direct or indirect interest as a disclosed or beneficial owner, investor, partner, director, officer, or employee in a management or sales capacity in any Competitive Business. This restriction applies within the franchisee's Territory or within 50 miles of any point on the outer perimeter of their Territory.
This non-compete clause prevents former All County franchisees from leveraging their knowledge and experience gained during the franchise term to unfairly compete with All County. A "Competitive Business" is defined as any business that offers real estate property management services or products that are the same or similar to those offered by All County businesses, or any business that offers franchises or licenses to others to operate such businesses.
All County may seek a court order to enforce the covenant not to compete, potentially extending the injunction against competition for two years from the date the order is issued. The FDD states that franchisees possess general skills and abilities and have other opportunities to earn a living, so enforcing these covenants will not deprive them of their personal goodwill or ability to earn a living. This suggests that All County believes the non-compete is reasonable and necessary to protect its business interests.
It is important for prospective franchisees to carefully consider the scope and duration of this non-compete agreement, as it could significantly limit their business opportunities after leaving the All County franchise system. Franchisees should seek legal counsel to fully understand the implications of this clause and how it might affect their future career options.