Who benefits from the terms of the non-compete agreement in the All Team Franchise Agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
ATFC intends to restrict the activities of the FRANCHISEE under Sections XI.A. and B. of this Agreement only to the extent necessary for the protection of ATFC's legitimate business interests. Each of the foregoing covenants shall be construed as severable and independent and shall be interpreted and applied consistent with the requirements of reasonableness and equity. In the event a court of competent jurisdiction shall determine the business, time, or geographic limitations contained in this Agreement are illegal, invalid or unenforceable, then, the court so holding shall reduce the limitation necessary to render such restriction enforceable by such court. ATFC shall have the right to reduce the scope of any covenant contained in this Section XI, without FRANCHISEE's consent, effective immediately upon receipt by FRANCHISEE of written notice thereof; and FRANCHISEE shall comply with any covenant as so modified. In addition to any other remedies available at law or equity, ATFC shall have the right to injunctive relief for a violation or threatened violation of the foregoing. FRANCHISEE acknowledges that the restrictions imposed in this Section are reasonable and their enforcement will not cause an undue burden upon FRANCHISEE's ability to earn a livelihood. The terms of this non-compete are assignable by ATFC and shall inure to the benefit of ATFC, as well as its successors and assigns. In the event of any assignment, sale, merger or change in ownership or structure of ATFC, the resulting entity shall step into the place of ATFC, without any additional consent of or notice to the FRANCHISEE, as if the term ATFC were defined in this Agreement to include such entity.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the non-compete agreement is primarily for the benefit of All Team Franchise Corporation (ATFC), its successors, and assigns. The agreement aims to protect All Team's knowledge, know-how, expertise, and legitimate business interests by restricting franchisees from engaging in similar or competing businesses during the term of the agreement and for a period of two years after termination. This ensures that franchisees do not use the franchisor's proprietary information and systems to unfairly compete against All Team.
The non-compete terms are assignable by All Team, meaning that if All Team is sold, merged, or undergoes a change in ownership, the resulting entity will also benefit from the non-compete agreement. This provision ensures the continued protection of All Team's business interests even if the company structure changes. The agreement explicitly states that it inures to the benefit of All Team, as well as its successors and assigns, reinforcing that the non-compete is designed to safeguard the franchisor's business and competitive advantage.
For a prospective franchisee, this means that they will be restricted from operating a similar business during the franchise term and for two years afterward, within a defined scope. The definition of a "Similar Business" is subject to change as the business of the Agency changes. The franchisee acknowledges that these restrictions are reasonable and will not cause undue burden on their ability to earn a livelihood. However, it is crucial for potential franchisees to fully understand the scope and limitations of the non-compete agreement before signing the franchise agreement, as it will significantly impact their business activities if they decide to leave the All Team franchise system.