What are the non-competition covenants after the Beehive Homes franchise is terminated or expires?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | FRANCHISE AGREEMENT SECTION | SUMMARY |
|---|---|---|
| a. Length of the franchise | Section 5.1 | ten years |
| term | ||
| b. Renewal or extension of | Section 5.2 | additional ten year renewal periods if you |
| the term | are in good standing | |
| c. Requirements for franchisees to renew or extend | Section 5 | three to nine month advance notice, approval by US, and signing by YOU of the current form of franchise agreement, which may have materially different terms and conditions from your initial franchise agreement |
| d. Termination by YOU | Not Applicable | Not Applicable |
| e. Termination by US without | Not Applicable | Not Applicable |
| cause | ||
| f. Termination by US with cause | Section 14 | WE can terminate if YOU commit certain events of default or other breaches of the Franchise Agreement |
| g. "Cause" defined - curable defaults | Section 14.1 | YOU have 30 days to cure: nonpayment of fees, nonperformance of franchise agreement where performance can be completed |
| h. “Cause” defined - non- curable defaults | Section 14.1 | non-curable defaults: bankruptcy (may not be enforceable under federal bankruptcy law), unauthorized transfers, abandonment, trademark misuse |
| i. YOUR obligations on termination/nonrenewal | Section 14.4; 14.5; 14.6 & 14.7 | pay amounts due; sell Home to Franchisor |
| j. Assignment of contract by | Section 13.1 | Assignee reasonably willing and able to |
| US | perform | |
| k. "Transfer" by YOU - | Section 2.20; | includes transfer of contract or assets and |
| defined | 13.2 | change in ownership |
| l. OUR approval of transfer | Section 13.4 | prior written approval but not |
| by YOU | unreasonably withheld | |
| m. Conditions for OUR | Section 13.4 | payment of fees, new franchise |
| approval of transfer | agreement, training | |
| n. OUR right of first refusal | Section 13.6 | WE can match any offer |
| to acquire YOUR business | ||
| o. OUR option to purchase YOUR business | Section 14.5 | WE can purchase YOUR business for the initial cost of the real property and the book value of the personal property upon an Event of Default |
| p. YOUR death or disability | Section 13.3 | transfer must generally be approved within 6 months. Please refer to the state cover page, if any, accompanying this Franchise Disclosure Document for any special provisions applicable to YOUR state |
| q. Non-competition | Section 12.1 | no involvement in competing business |
| covenants during the term of | ||
| the franchise | ||
| r. Non-competition covenants after the franchise is terminated or expires | Section 12.1 | no involvement in competing business for three years. Please refer to the state cover page, if any, accompanying this Franchise Disclosure Document for any special provisions applicable to YOUR state. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 25–27)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot be involved in a competing business for three years after the termination or expiration of the Beehive Homes franchise agreement. The FDD also advises franchisees to refer to the state cover page for any special provisions applicable to their state regarding non-competition covenants.
Non-competition agreements are common in franchising to protect the brand and trade secrets of the franchisor. The three-year restriction is intended to prevent a former franchisee from using the knowledge and experience gained while operating a Beehive Homes franchise to unfairly compete with the system. This restriction typically applies regardless of whether the franchise agreement was terminated by the franchisor or the franchisee, or whether it simply expired at the end of its term.
It is important for prospective Beehive Homes franchisees to carefully review Section 12.1 of the franchise agreement, as well as any state-specific disclosures, to fully understand the scope and enforceability of the non-competition covenant in their specific jurisdiction. State laws governing non-compete agreements can vary significantly, and some states may have stricter limitations on their enforceability than others. Franchisees should seek legal advice to understand how these restrictions may impact their future business opportunities after leaving the Beehive Homes system.
Therefore, understanding the terms of the non-compete agreement is crucial for any potential Beehive Homes franchisee to assess the long-term implications of investing in the franchise. Franchisees should consider how this restriction might affect their ability to pursue other business ventures in the same or related industries after the franchise relationship ends.