Is there a geographic limit specified for the post-termination non-compete covenant for Apricot Lane?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE specifically acknowledges that, pursuant to this Agreement, FRANCHISEE will receive valuable training, resources, contacts and Confidential Information, including, without limitation, information regarding the promotional, operational, sales and marketing methods and techniques of FRANCHISOR and the System. For a period of two (2) years after expiration of or after termination of this Agreement for any reason, FRANCHISEE shall not either directly or indirectly, for itself/himself/herself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, own, maintain, engage in, provide management, resources, contacts, vendors or consulting services to, act as a lender for, provide assets to, or have any interest in any business that offers or sells, in any channel of distribution, an assortment of merchandise that is similar to the assortment of merchandise then being carried in the Specialty Stores unless granted prior approval in writing by FRANCHISOR:
- a. Within the Territory;
- b. Within a radius of ten (10) miles of the location of any other Specialty Store, whether franchised or owned by FRANCHISOR; or
- c. Though e-commence where such sales are substantially supported within the Territory (including, but not limited to, support provided by offices, administrative centers, communication centers, warehouses, distribution centers and/or servers located within the Territory).
C. Enforceability of Covenants
Each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement. FRANCHISEE acknowledges and agrees that each restriction in this Section 17 is reasonably necessary to protect and preserve the System. If all or any portion of a covenant in Section 17 is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which FRANCHISOR is a party, FRANCHISEE shall be bound by any lessor covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of Section 17.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the post-term non-compete covenant includes specific geographic limitations. For a period of two years after the termination or expiration of the Franchise Agreement, the franchisee is restricted from engaging in a similar business. This restriction applies within the franchisee's territory, within a 10-mile radius of any other Apricot Lane store (whether franchised or owned by the franchisor), or through e-commerce where sales are substantially supported within the territory. Substantial support includes offices, administrative centers, communication centers, warehouses, distribution centers, and/or servers located within the territory.
This means that after leaving the Apricot Lane franchise system, a former franchisee cannot operate a similar retail business selling fashion apparel, accessories, and related items within their original territory or near other Apricot Lane locations. The e-commerce restriction is particularly important, as it prevents franchisees from circumventing the physical location restrictions by selling online to customers within those protected areas. This is designed to protect the existing franchisees and the franchisor from direct competition from a former franchisee who has gained knowledge and experience within the Apricot Lane system.
The inclusion of specific geographic and e-commerce restrictions in the post-term non-compete covenant is a common practice in franchising. It aims to safeguard the franchisor's brand, customer base, and the investment of other franchisees. Prospective franchisees should carefully consider these restrictions and how they might impact their future business opportunities should they decide to leave the Apricot Lane system. It is advisable to seek legal counsel to fully understand the implications of these covenants before signing the Franchise Agreement.
Apricot Lane also states that each covenant within the agreement is independent. If any part of the non-compete agreement is deemed unenforceable by a court, the franchisee is still bound by the maximum duty permitted by law. This ensures that Apricot Lane can enforce the non-compete to the fullest extent possible, even if specific clauses are challenged.