Does the non-competition clause in the All Team franchise agreement apply during the term of the agreement?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Competing Business During the Term of This Agreement. FRANCHISEE acknowledges that ATFC is making its knowledge, know-how, and expertise available to it for the purpose of operating the Agency strictly and solely within the Area. FRANCHISEE agrees that it would be an unfair method of competition to use or duplicate or to allow others to use or duplicate any of the knowledge, know-how and expertise received by FRANCHISEE for any reason other than for the operation of the Agency under this Agreement. FRANCHISEE further recognizes the importance of devoting substantial time and energy to Agency. FRANCHISEE, therefore, warrants that during the term of this Agreement, unless FRANCHISEE has the prior written consent of ATFC, FRANCHISEE shall not directly or indirectly, through itself or through corporations, partnerships, trusts, associations, joint ventures, unincorporated businesses, limited liability companies, or otherwise perform any services for, engage in or acquire, be an employee of, have any financial, beneficial or equity interest in, loan money to, lease property to, or have any interest based on profits or revenues of any business which is similar or competing with the business franchised hereunder ("Similar Business"), except as a duly licensed franchisee of ATFC. This section does not limit FRANCHISEE's obligation under Section XI.B. of this Agreement.
At the time that this Agreement is signed, a "Similar Business" is one which provides temporary and permanent staffing in the following areas: healthcare and environmental, hospitality and food service, management recruiting, labor and light industrial and administrative and clerical. However, as noted in Section XV, the business of the Agency is subject to change, and a "Similar Business" shall be interpreted at the time that the applicable provision is effective.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the franchise agreement includes a non-competition clause that applies during the term of the agreement. The FDD states that franchisees acknowledge All Team is making its knowledge, know-how, and expertise available to them for operating the agency strictly within the designated area. Franchisees agree that using or duplicating this knowledge outside of operating the All Team agency would be an unfair method of competition.
Specifically, during the term of the agreement, franchisees cannot directly or indirectly engage in any business that is similar to or competes with the All Team franchised business, unless they obtain prior written consent from All Team. This restriction includes performing services for, being employed by, having a financial interest in, loaning money to, or leasing property to any competing business. A "Similar Business" at the time the agreement is signed includes providing temporary and permanent staffing in areas such as healthcare, hospitality, management recruiting, labor, and administrative roles. However, the definition of "Similar Business" is subject to change as the business of the agency evolves.
This non-compete clause ensures that franchisees focus their efforts on growing their All Team agency and do not use the franchisor's proprietary information and resources to benefit a competing business. It is important to note that this restriction is in addition to the non-competition clause that applies after the termination or expiration of the franchise agreement. Franchisees should carefully consider the scope and limitations of both non-compete clauses before entering into the agreement.