After the Card My Yard franchise is terminated or expires, what are the non-competition covenants that apply to the franchisee?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
| n. Franchisor's right of first refusal to acquire franchisee's business | Section XV.D. | On 30 days' written notice, we have the option to purchase an interest being transferred on the same terms and conditions offered by a third party. |
|---|---|---|
| o. Franchisor's option to purchase franchisee's business | Sections XIX.A(8) and (9) and XIX.B. | Upon termination or expiration we have the option to purchase your advertising materials bearing the Marks at your cost. We also have the option to acquire the assets of the Card My Yard business (including all yard signs and letters) from you at fair market value. |
| p. Death or disability of franchisee | Section XV.E. | On death or permanent disability of you or an Owner the person's interest must be transferred to someone we approve within 6 months. |
| q. Non-competition covenants during the term of the franchise | Section XI.C.(1) | Subject to applicable state law: You may not operate or have an interest in a business which is similar to the franchised business and which is located within the United States, its territories or commonwealths, or any other country, province, state or geographic area in which we or our affiliates have used, sought registration of or registered the Marks or similar marks or operate or license others to operate a business under the Marks or similar marks. |
| r. Non-competition covenants after the franchise is terminated or expires | Sections XI.C.(2) | Subject to applicable state law: For 2 years you may not |
Source: Item 17 — RENEWAL TERMINATION TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 51–55)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, franchisees are subject to certain non-competition covenants after the franchise is terminated or expires. Specifically, for a period of 2 years, franchisees are restricted from engaging in similar business activities. These restrictions are subject to applicable state law.
This means that after a Card My Yard franchise agreement ends, the former franchisee cannot operate or have an interest in a similar business for two years. This restriction likely aims to protect Card My Yard's market share and prevent former franchisees from using the brand's confidential information or business model to compete against them. The enforceability and specific terms of these covenants can vary depending on the state laws governing the franchise agreement.
Prospective franchisees should carefully review Section XI.C.(2) of the Franchise Agreement and consult with legal counsel to understand the full scope and implications of these non-competition covenants in their specific state. Understanding these restrictions is crucial for planning future business ventures after the Card My Yard franchise term ends.