For Belocal, what is the duration of the non-compete period for a Covenantor after the termination of their business relationship with the Franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to protect the Confidential Information, the Marks, the goodwill of the System, and the legitimate business interests of the Franchised Business, Covenantor agrees that, during the term of his or her business relationship with the Franchisee or the Franchised Business, and for a period of two years following the earlier of (A) the termination of Covenantor's business relationship with Franchisee (regardless of the reason for such termination), or (B) the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement (regardless of the reason for termination, expiration, or transfer), Covenantor will not, without Franchisor's prior written consent or as permitted under a valid franchise agreement with Franchisor:
- (i) own, operate, or manage any Competitive Business; or
- (ii) engage in, provide, or assist others in engaging in or providing, Competitive Services; or
- (iii) perform any activities for or relating to a Competitive Business, the performance of which is reasonably likely to involve the use or disclosure of Confidential Information, which activity is similar to any activity Covenantor engaged in during the twelve-month period prior to the termination of Covenantor's business relationship with Franchisee or the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement; provided, however, that nothing herein shall prohibit Covenantor from owning, solely as an investment, securities of any Person traded on any national securities exchange if neither Franchisee nor any Covenantor controls, or is a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a Covenantor is subject to a non-compete agreement for a period of two years after the termination of their business relationship with the Franchisee. This non-compete period begins following the earlier of (A) the termination of the Covenantor's business relationship with the Franchisee, regardless of the reason, or (B) the termination, expiration, or transfer of the Franchisee's interest in the Franchise Agreement, regardless of the reason.
During this two-year period, the Covenantor is restricted from owning, operating, or managing any Competitive Business. They are also prohibited from engaging in, providing, or assisting others in providing Competitive Services. Additionally, the Covenantor cannot perform activities for or relating to a Competitive Business if those activities are likely to involve the use or disclosure of Confidential Information and are similar to activities they engaged in during the twelve-month period before their relationship with the Franchisee ended.
However, the non-compete agreement does not prevent the Covenantor from owning securities of any publicly traded company as a passive investment, provided that neither the Franchisee nor the Covenantor controls the company or owns 5% or more of any class of its securities. This exception allows for personal investments without violating the non-compete terms.
These restrictions are designed to protect Belocal's confidential information, trademarks, goodwill, and legitimate business interests. The FDD states that these covenants contain reasonable limitations regarding time, geographical area, and scope of activity, ensuring they do not impose a greater restraint than necessary to protect Belocal's interests.