Are there any exceptions to the non-competition covenants for C12 Group franchisees after termination or expiration, based on state law?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
s of competing or contrary purpose while a franchisee. Subject to state law. | | r. Non-competition covenants after the franchise is terminated or expires | I, IV, VIII, XV | For two (2) years after the termination of the Franchise Agreement for any reason, Franchisee shall not directly or indirectly own an interest in or otherwise be employed by or engaged with a Competitive Business within the Territory, within ten (10) miles of the Territory, within the territory of any other C12 franchise, or within ten (10) miles of the territory of any other C12 franchise, subject to state law. For purposes of this Section, a "Competitive Business" is any business that offers peer mentorship and coaching to Christian business leaders. The post termination non-competition obligations under this Section shall not apply if Franchisee pays Franchisor the Exit Fee described above. The Exit Fee is equal to the average Royalty owed to C12 over the three (3) months preceding termination multiplied by twelve (12). Subject to state law. | | s. Modification of agreement | XV, XVI | No modifications generally, and specifically not unless both parties agree in writing, but C12 Chair Training Manual subject to change and updating by C12. | | t. Integration/merger clause | XV | Only the terms of the Franchise Agreement and other related written agreements are binding (subject to applicable state law). No other representations or promises will be binding. Nothing in the Franchise Agreement or any other related written agreement is intended to disclaim representations made in the Franchise Disclosure Document. | | u. Dispute resolution by | XII, Exhibit F | All matters can be appealed up through C12's | |--------------------------|----------------|------------------------------------------------------------| | arbitration or mediation | | defined three-step dispute resolution process which | | | | culminates in Christian arbitration pursuant to which | | | | the parties engage three Bible-believing Christian | | | | arbitrators as follows: one selected by the franchisee, | | | | one selected by C12, and one selected by such two | | | | arbitrators.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–40)
What This Means (2025 FDD)
According to the 2025 FDD, the non-competition covenants for C12 Group franchisees after termination or expiration are subject to state law. The standard non-compete lasts for two years after termination, preventing the franchisee from engaging with a competitive business within their territory, ten miles of their territory, or within ten miles of any other C12 Group franchise territory. A "Competitive Business" is defined as one that offers peer mentorship and coaching to Christian business leaders.
However, Item 17 in the FDD indicates that the non-competition covenants after the franchise is terminated or expires are subject to state law. This suggests that specific state laws may provide exceptions or modify the enforceability of these covenants.
Additionally, addenda for Minnesota, North Dakota, and Washington contain stipulations that could impact the enforcement of non-compete agreements. For example, the Minnesota addendum states that nothing in the FDD or agreement can reduce a franchisee's rights under Minnesota Statutes, Chapter 80C, or their rights to any procedure, forum, or remedies provided by the laws of the jurisdiction. The Washington addendum indicates that the Washington Franchise Investment Protection Act may supersede the franchise agreement, including areas of termination and renewal.