Following termination of a Canopy Lawn Care franchise, what is the geographic scope of the non-compete restriction?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
d or employed in any business operating in competition with a lawn care business or any Business as carried on during the Initial Term of this Agreement, including any Interim Period thereof.
- (b) Upon termination or expiration of the Initial Term or any Interim Period, regardless of the cause, or the transfer, sale or assignment of this Agreement by Franchisee, neither Franchisee, any guarantors, the Designated Business Manager nor Franchisee's owners will have any direct or indirect interest (i.e., through a relative) as a disclosed or beneficial owner, investor, partner, director, officer, employee, consultant, representative or agent, for two (2) years; in any Business: (1) in the Territory or any other franchisee's territory; (2) within 10 miles of the Territory or any other franchisee's territory; or (3) within 10 miles of any Franchisor or Affiliate owned Lawn Care Business.
- 14.3 If any person restricted by this Section 14 refuses to voluntarily comply with the foregoing obligations, the 2 year period will commence upon the entry of any order of a court or arbitrator enforcing this Section 14.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to the 2025 Canopy Lawn Care FDD, upon termination or expiration of the franchise agreement, the franchisee, any guarantors, the Designated Business Manager nor Franchisee's owners are restricted from having any direct or indirect interest in any competing business for two years. This restriction applies to businesses (1) in the Territory or any other franchisee's territory; (2) within 10 miles of the Territory or any other franchisee's territory; or (3) within 10 miles of any Canopy Lawn Care or Affiliate owned Lawn Care Business.
This means that after leaving the Canopy Lawn Care system, a former franchisee is significantly limited in their ability to operate or be involved with a competing lawn care business. The non-compete extends not only to their original territory but also to any other franchisee's territory and areas within a 10-mile radius of those territories, as well as areas within 10 miles of any company-owned Canopy Lawn Care business. This broad geographic scope aims to protect Canopy Lawn Care's market share and the interests of its other franchisees.
The FDD also states that if any person restricted by this non-compete refuses to voluntarily comply, the two-year period will commence upon the entry of any order of a court or arbitrator enforcing this section. This clause clarifies that the non-compete clock doesn't start until a legal order is in place, should the franchisee challenge the restriction. Canopy Lawn Care emphasizes that the non-compete is intended to be only as restrictive as necessary to protect the company from unfair competition.
Prospective franchisees should carefully consider the implications of this non-compete agreement. It could significantly limit their future business opportunities in the lawn care industry, especially if they plan to remain in the same geographic area after leaving the Canopy Lawn Care system. It is advisable to seek legal counsel to fully understand the terms and potential impact of this restrictive covenant.