Are non-competition covenants applicable after the C3 Wellness Spa franchise is terminated or expires under the Multi-Unit Development Agreement?

According to C3 Wellness Spa's 2024 Franchise Disclosure Document, non-competition covenants are not applicable to the Multi-Unit Development Agreement itself after termination or expiration. However, each individual Spa Location Franchise developed under the Multi-Unit Development Agreement will be subject to the non-competition covenants outlined in its respective Franchise Agreement. This means that while the agreement to develop multiple units doesn't restrict competition after it ends, the agreements for each spa location do.

Specifically, after the franchise is terminated or expires, a franchisee cannot be involved in, own, or have any interest in a competing business for 24 months. This restriction applies within the franchisee's designated territory, a 25-mile radius of that territory, and a 25-mile radius of any other C3 Wellness Spa Location Franchise's designated territory. Additionally, the franchisee must continue to comply with confidentiality, non-disclosure, and non-solicitation covenants.

This post-term non-compete is a fairly standard practice in franchising to protect the brand and prevent franchisees from using the franchisor's confidential information and business model to compete against the system after leaving. Prospective C3 Wellness Spa franchisees should carefully review the specific terms of the non-competition covenants in the Franchise Agreement for each spa location to understand the full scope of these restrictions and how they might impact their future business activities.