What is Aw's recourse if a franchisee violates the post-term covenant not to compete?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.3 Enforcement of Covenants Not to Compete. You acknowledge that violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to us for which no adequate remedy at law will be available. Accordingly, you hereby acknowledge that we may seek to obtain the entry of an injunction prohibiting any conduct by you or your Owners in violation of the terms of the covenants not to compete set forth in this Agreement. You expressly agree that it may conclusively be presumed that any violation of the terms of said covenants not to compete was accomplished by and through your unlawful use of our Confidential Information. Further, you expressly agree that the existence of any claims you may have against us, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by us of the covenants not to compete set forth in this Agreement. You further agree to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by the us in connection with the enforcement of those covenants not to compete set forth in this Agreement.
18. DISPUTE RESOLUTION
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw can seek an injunction against a franchisee or their owners to prohibit conduct that violates the post-term covenant not to compete. Aw can pursue this action in court without needing to post a bond. The FDD states that a violation of the non-compete agreement would cause immediate and irreparable harm to Aw, for which monetary compensation would not be adequate.
Aw can seek an injunction to prevent the franchisee from violating the non-compete terms. The franchisee agrees that any violation of the non-compete terms would be considered an unlawful use of Aw's confidential information. The existence of any claims the franchisee may have against Aw does not serve as a defense against Aw enforcing the non-compete agreement.
Furthermore, the franchisee is responsible for covering all costs and expenses, including reasonable attorney's and expert's fees, incurred by Aw in enforcing the non-compete obligations. This means that if Aw has to take legal action to stop a former franchisee from competing, the franchisee may have to pay Aw's legal bills in addition to any other penalties the court may impose.
Finally, Aw retains the right to pursue other available remedies under the agreement, law, or equity, in addition to the actions described above. Aw can pursue legal action against franchisees who breach the non-compete agreement, potentially incurring significant legal expenses.