Does the All States M.E.D. franchisor have the right to require certain individuals to execute non-disclosure or non-competition agreements?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor has the right to require any holder of a legal or beneficial interest in Franchisee, and any officer, director, executive, manager or member of the professional staff and all employees of Franchisee to execute a nondisclosure and non-competition agreement, in a form the same as or similar to the Nondisclosure and Non-Competition Agreement attached as Schedule 2, upon execution of this Agreement or prior to each such person's affiliation with Franchisee. Upon Franchisor's request, Franchisee shall provide Franchisor with copies of all nondisclosure and non-competition agreements signed according to this Section. Such agreements shall remain on file at the business of Franchisee and are subject to audit or review as otherwise stated here. Franchisor shall be a third-party beneficiary with the right to enforce covenants contained in such agreements.
7.5 Reasonableness of Restrictions
Franchisee acknowledges that the restrictive covenants contained in this Section are essential elements of this Agreement, and that without their inclusion Franchisor would not have entered into this Agreement. Franchisee acknowledges that each of the terms stated here, including the restrictive covenants, is fair and reasonable and is reasonably required for the protection of Franchisor, the System and the Marks.
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, All States M.E.D. has the right to require certain individuals to sign non-disclosure and non-competition agreements. This includes anyone holding a legal or beneficial interest in the franchisee, as well as any officer, director, executive, manager, member of the professional staff, and all employees of the franchisee. These agreements must be executed upon signing the Franchise Agreement or before the individual's affiliation with the franchisee. The agreements must be in a form similar to the Nondisclosure and Non-Competition Agreement attached as Schedule 2 in the FDD.
All States M.E.D. requires franchisees to provide copies of all signed non-disclosure and non-competition agreements upon request. These agreements must be kept on file at the franchisee's business and are subject to audit or review. All States M.E.D. is considered a third-party beneficiary of these agreements, giving them the right to enforce the covenants within them.
The Franchise Agreement states that the restrictive covenants, including non-disclosure and non-competition agreements, are essential elements of the agreement. All States M.E.D. would not enter into the agreement without these protections. Franchisees acknowledge that these terms, including the restrictive covenants, are fair, reasonable, and necessary to protect All States M.E.D., its system, and its marks.