After the Belocal agreement terminates, what activities related to a Competitive Business are prohibited if they involve Confidential Information?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
For a period of two years after the termination, expiration, or transfer of this Agreement, regardless of the reason for such termination, expiration, or transfer, Franchisee and its Owner(s) shall not, within the Restricted Territory (as defined in Section 7.G. below):
(1) own, operate, or manage any Competitive Business, or
(2) engage in, provide, or assist others in engaging in or providing any Competitive Services; or
(3) perform any activities for or relating to a Competitive Business, the performance of which would reasonably be likely to involve the use or disclosure of Confidential Information, and which activity is similar to the activities Franchisee or the Owner(s) engaged in during the twelve-month period prior to the termination, expiration, or transfer of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, for two years after the termination, expiration, or transfer of the Franchise Agreement, the franchisee and their owners cannot perform activities for or relating to a Competitive Business if those activities would likely involve the use or disclosure of Confidential Information. This restriction applies only to activities similar to those the franchisee or owners engaged in during the twelve-month period before the termination, expiration, or transfer of the agreement.
This post-term noncompetition clause means that a former Belocal franchisee is restricted from engaging in activities that could leverage Belocal's confidential information to compete against them. The restriction is limited to activities similar to those performed during the last year of the franchise agreement, suggesting that the franchisee can pursue other business activities outside the scope of their prior role.
Confidential Information includes a wide array of data and knowledge related to Belocal, its affiliates, and the franchised business. This includes trademarks, trade names, service marks, trade secrets, research, plans, customer lists, supplier information, business plans, marketing data, software, financial information, and manuals. The broad definition of Confidential Information means franchisees must be careful to avoid using any knowledge gained during their time with Belocal that could be considered proprietary.
This type of non-compete agreement is common in franchising to protect the franchisor's business interests and proprietary information. Prospective Belocal franchisees should carefully review the definition of "Confidential Information" and "Competitive Business" in the Franchise Agreement to fully understand the scope of these restrictions and how they might impact their future business endeavors after leaving the Belocal system.