Is a former All States M.E.D. franchisee prohibited from operating a competitive business within 90 miles of any other All States M.E.D. business in existence at the time of termination?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
h the Marks in any regular, classified or other telephone directory listing and shall authorize transfer of same to or at the direction of Franchisor; and
- (h) comply with all other applicable provisions of this Agreement.
17.2 Post-Termination Covenant Not to Compete
- 17.2.1 Franchisee acknowledges that the restrictive covenants contained in this Section and in Section 17 are fair and reasonable.
- 17.2.2 Except as otherwise approved in writing by Franchisor, neither Franchisee, nor any holder of a legal or beneficial interest in Franchisee, nor any officer, director, executive, manager or member of the professional staff of Franchisee, shall, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly:
- (a) offer Competitive Business services located or operating (a) at or within a ninety (90) mile radius of the Franchised Business, or (b) within a ninety (90) mile radius of any other All States M.E.D. Business in existence at the time of termination or expiration, or (c) any other business owned or operated by the Franchisor in existence at the time of termination or expiration;
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, a franchisee is restricted from offering competitive business services within a specific radius after the termination or expiration of the franchise agreement. Specifically, for a period of two years after the agreement ends, the franchisee cannot operate a competitive business within a 90-mile radius of either the former franchised business location or any other All States M.E.D. business that existed at the time of termination or expiration. This restriction applies regardless of the reason for the termination.
This non-compete clause is designed to protect All States M.E.D.'s market share and brand integrity by preventing former franchisees from leveraging the knowledge and experience gained during their time with the company to directly compete against it. The clause also extends to preventing the franchisee from soliciting or influencing any customer or business associate of All States M.E.D. to terminate or modify their relationship with the company or to compete against it.
For a prospective All States M.E.D. franchisee, this means that upon leaving the franchise system, they will be unable to operate a similar business within the defined geographic area for two years. This could significantly limit their options if they wish to remain in the same industry. It is important to carefully consider the implications of this restriction and factor it into any long-term business plans. Franchisees should also be aware that All States M.E.D. has the right to require certain individuals to execute standard form nondisclosure or non-competition agreements.