Are the non-competition covenants perpetually binding on the Owners of a Card My Yard franchise?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
These covenants shall survive the expiration, termination or transfer of this Agreement or any interest herein and shall be perpetually binding upon you and each of the Owners.
- C.
Noncompetition Covenants.
You and your Owners specifically acknowledge that, pursuant to this Agreement, you and they will receive access to valuable training and Confidential Information which are beyond your and their present skills and experience, including, without limitation, information regarding operational, sales, promotional and marketing methods and techniques of the System.
You and your Owners further acknowledge that such specialized training and Confidential Information provide a competitive advantage, and that gaining access to them is a primary reason for entering into this Agreement.
Accordingly, you and your Owners agree as follows:
(1) With respect to you, during the term of this Agreement (or with respect to each of the Owners, for so long as such person satisfies the definition of "Owner" under this Agreement), except as otherwise approved in writing by us, neither you nor any of your Owners shall, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, legal entity or association:
(a) Directly or indirectly divert, or attemptto divert, any business or customer of Card My Yard businesses to any competitor, or do or perform any other act injurious or prejudicial to the goodwill associated with the Marks and the System.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to the 2025 Card My Yard Franchise Disclosure Document, the non-competition covenants have varying terms. During the term of the Franchise Agreement, Owners are restricted from engaging in activities that compete with Card My Yard, such as diverting customers or having a financial interest in similar businesses. These restrictions apply as long as the person meets the definition of "Owner" under the agreement.
Post-termination, expiration, or transfer of the Franchise Agreement, the non-compete restrictions for Owners are limited to a two-year period. During this two-year period, the restrictions apply to operations (i) at the Franchise Location, (ii) within the Protected Area, (iii) within a twenty-five (25)-mile radius of the Franchise Location, or (iv) within a twenty-five (25)-mile radius of any Card My Yard business then in existence or under construction.
However, the confidentiality agreements within the Card My Yard Franchise Agreement survive the termination, expiration, or transfer of the agreement and are perpetually binding on the franchisee and each of the Owners. This means that while the non-compete agreement has a limited duration, the obligation to maintain the confidentiality of Card My Yard's proprietary information continues indefinitely.