Under what specific conditions after termination of the Big O Tires franchise agreement does the post-termination covenant not to compete apply to the franchisee?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee terminates this Agreement other than in a manner prescribed by Section 19.04, if this Agreement is terminated pursuant to Section 18.05(d), or if this Agreement is terminated for "good cause" as defined in Section 19.01, Franchisee, its Owners, officers, directors, and guarantors covenant that they shall not directly or indirectly, for a period of two (2) years after the Termination Date of this Agreement, engage in any business, other than as a Franchisee of the Big O System, or as a franchisee of any affiliate or parent of Big O, or their subsidiaries, which offers or sells tires, wheels, automotive services, or other products or services which compete with Big O Products and Services within a ten (10) mile radius of the Premises or within a ten (10) mile radius of any other Big O Store which was operational or under construction on the Termination Date.
If a former Franchisee or guarantor commits a breach of this Section 17.04, the two year period shall start on the date that the former Franchisee or guarantor is enjoined from competing or stops competing, whichever is later.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to the 2025 Big O Tires Franchise Disclosure Document, the post-termination covenant not to compete applies if the franchisee terminates the agreement in a manner not prescribed by Section 19.04, if the agreement is terminated pursuant to Section 18.05(d), or if the agreement is terminated for "good cause" as defined in Section 19.01. In these instances, the franchisee, its owners, officers, directors, and guarantors agree not to engage in any competing business for two years after the termination date.
This restriction includes businesses that offer or sell tires, wheels, automotive services, or other products and services that compete with Big O Tires. The geographic scope of this covenant extends to a ten-mile radius of the former Big O Tires premises or within a ten-mile radius of any other Big O Tires store that was operational or under construction on the termination date.
The FDD specifies that if a former franchisee or guarantor breaches this non-compete agreement, the two-year period restarts from the date they are legally stopped from competing or when they voluntarily cease competing, whichever occurs later. This clause ensures that Big O Tires can protect its market and brand integrity even after a franchise agreement ends under specific circumstances.