What is required for Canopy Lawn Care to reduce the scope of any covenants of the franchisee?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
14.2 Restrictive Covenants. Franchisee covenants and agrees that:
- (a) During the Initial Term of this Agreement and any Interim Period thereof, Franchisee, its owners, guarantors and Designated Business Managers shall not, without the prior written consent of Franchisor, either individually or in a partnership, corporation, limited liability company, joint venture or other business entity or jointly or in conjunction with any person, firm, association, syndicate or corporation, as principal, agent, shareholder, member, partner, employee or in any manner whatsoever, carry on or be engaged in or be concerned with or interested in or advise, lend money to, guarantee the debts or obligations of or permit its name or any part thereof to be used 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.
14.4 The parties have attempted in Section 14.2 to limit Franchisee's right to compete only to the extent necessary to protect Franchisor from unfair competition.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to the 2025 Canopy Lawn Care FDD, the franchise agreement includes restrictive covenants that limit a franchisee's ability to compete with Canopy Lawn Care during the term of the agreement and for a period after termination or expiration. Specifically, during the initial term and any interim period, franchisees, their owners, guarantors, and designated business managers cannot engage in any business that competes with a lawn care business without prior written consent from Canopy Lawn Care.
After the termination, expiration, transfer, sale, or assignment of the franchise agreement, the franchisee, guarantors, designated business manager, and the franchisee's owners are restricted from having any direct or indirect interest in a competing business for two years. This restriction applies within the franchisee's territory, any other franchisee's territory, or within 10 miles of any Canopy Lawn Care or affiliate-owned lawn care business.
The FDD states that Canopy Lawn Care has attempted to limit the franchisee's right to compete only to the extent necessary to protect Canopy Lawn Care from unfair competition. If someone refuses to comply with these obligations, the two-year period will begin when a court or arbitrator enforces these restrictions.