Is a former All States M.E.D. franchisee prohibited from operating a competitive business within 90 miles of any business owned or operated by the Franchisor 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.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, a franchisee is restricted from offering competitive business services within a 90-mile radius after the termination or expiration of the franchise agreement. This restriction applies for a period of two years, regardless of the reason for termination.
Specifically, the franchisee is prohibited from operating a competitive business (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. This post-termination covenant not to compete is in place to protect All States M.E.D.'s market share and brand reputation.
This restriction is acknowledged by All States M.E.D. franchisees as fair and reasonable. The franchisor also has the right to require certain individuals to execute standard form nondisclosure or non-competition agreements.