For Auntie Annes franchises in Indiana, does Section 15.4.B of the Franchise Agreement regarding post-term covenants not to compete have any geographic limitations?

According to Auntie Annes's 2024 Franchise Disclosure Document, Section 15.4.B of the Franchise Agreement, concerning post-term restrictive covenants, is revised for franchises sold in Indiana. The revision limits the geographical extent of the covenant not to compete to an area of reasonable size. This means that if a franchisee in Indiana leaves the Auntie Annes system, the post-term covenant restricting them from operating a competing business will be limited to a geographic area deemed reasonable under Indiana law.

This revision is favorable for prospective Auntie Annes franchisees in Indiana because it prevents Auntie Annes from enforcing an overly broad geographic restriction that could unduly limit their ability to earn a living after leaving the franchise system. Without this revision, the standard franchise agreement might impose a non-compete area that is too large, potentially hindering the franchisee's future business opportunities. The Indiana addendum ensures that the non-compete area is appropriately tailored.

The Indiana addendum to the Personal Covenants Agreement also reinforces this point, stating that the agreement is revised to limit the geographical extent of the covenant not to compete to an area of reasonable size for all franchises sold in Indiana. This further protects the franchisee by ensuring that any personal guarantees related to the franchise agreement also adhere to the same geographic limitations on the non-compete clause.

It is important for prospective franchisees to understand what constitutes a 'reasonable size' as it is not explicitly defined in the FDD. They should seek legal counsel to understand how Indiana courts interpret this term and to assess the specific implications for their situation. This will help them make an informed decision about investing in an Auntie Annes franchise in Indiana.