What happens to the obligations of non-competition after the Care Plus Medical Ucc franchise agreement is terminated?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Care Plus Medical business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Care Plus Medical business operating on the date of termination.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Care Plus Medical UCC. Franchisee agrees that the existence of any claim it may have against Care Plus Medical UCC shall not constitute a defense to the enforcement by Care Plus Medical UCC of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to Care Plus Medical Ucc's 2024 Franchise Disclosure Document, the non-compete obligations extend beyond the termination or expiration of the franchise agreement. Specifically, for two years after the agreement expires or is terminated for any reason, the franchisee, any owner, or any spouse of an owner cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by any competitor. This restriction applies within five miles of the franchisee's territory or the territory of any other Care Plus Medical Ucc business operating on the date of termination or transfer. If the agreement is terminated before the territory is determined, the non-competition area will be the Development Area and the territory of any other Care Plus Medical Ucc business operating on the date of termination.
This post-term non-compete clause is a standard practice in franchising to protect the brand and market share of Care Plus Medical Ucc. The document specifies that these covenants are independent of any other agreement provision. If any part of the non-compete agreement is deemed unenforceable or unreasonable by an arbitrator or court, the parties intend for the restriction to be modified to protect Care Plus Medical Ucc's legitimate business interests.
Furthermore, if a restricted party fails to comply with the non-compete obligations during the restrictive period, the period will be extended by an additional day for each day of noncompliance. This provision ensures that Care Plus Medical Ucc can enforce the non-compete agreement effectively. The obligations pertaining to non-competition will remain in effect after termination or expiration of the agreement.