For how long after the termination date does the post-termination non-competition covenant apply to a Bhc franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) For a period of two years after the date ("Termination Date") this Agreement is terminated, is canceled, or expires without renewal pursuant to section 5.2 of this Agreement, Franchisee agrees that neither Franchisee nor any Principal Equity Operator will (either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any person, persons, partnership, corporation or other entity) operate, manage, own, assist or hold an interest in (direct or indirect as an employee, officer, director, shareowner, partner or otherwise), or engage in, any competing business selling goods or offering services equivalent to BHC Products or the Franchised Business, within a radius
of 25 miles of Franchisee's Territory or any other authorized retail location selling BHC Products, without Franchisor's express prior written consent, which consent may be withheld in Franchisor's sole and absolute discretion. Following termination or expiration of this Agreement, Franchisee must always refrain from any use, direct or indirect, of any Proprietary Information or Trade Secrets.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee is subject to a post-termination non-competition covenant for a period of two years after the termination, cancellation, or expiration of the Franchise Agreement. This restriction applies if the agreement ends without renewal, as outlined in section 5.2 of the agreement.
During this two-year period, the franchisee and any Principal Equity Operator are prohibited from operating, managing, owning, assisting, or holding an interest in any competing business that sells goods or offers services equivalent to BHC Products or the Franchised Business. This restriction applies within a 25-mile radius of the franchisee's territory or any other authorized retail location selling BHC Products. Bhc may grant express prior written consent to waive this restriction, but such consent can be withheld at Bhc's discretion.
Following the termination or expiration of the Franchise Agreement, the franchisee must also refrain from using any Proprietary Information or Trade Secrets, whether directly or indirectly. This non-compete clause is fairly standard in franchising to protect the brand and trade secrets of the franchisor. However, the enforceability of non-compete clauses can vary by state, so a prospective franchisee should consult with legal counsel to understand the specific laws in their jurisdiction.