What happens to the time period of the Caring Transitions non-compete agreement if a violation occurs?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
15.3 Covenants After Termination of Franchise Agreement.
- (a) Except as otherwise approved in writing by Franchisor, Franchisee shall not, for a continuous and uninterrupted period commencing upon the expiration, termination, or transfer of this Agreement (regardless of the cause for termination) and continuing for two (2) years thereafter, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person (including a spouse, child, parent, or sibling of Franchisee or of a principal of Franchisee), partnership, limited liability company, corporation, or other entity:
- (1) own, maintain, operate, engage in, or have any interest in any business offering moving management, estate liquidation or household liquidation services, or any other services that had been offered by the franchised business, that is or is intended to be located or which operates in or within 15 miles of the geographical boundaries of Franchisee's Territory or within 15 miles of the geographical boundaries any Caring Transitions franchisee's Territory; or
- (2) promote, sell, procure, provide or solicit referrals for, or offer to sell, procure, provide or solicit referrals for, moving management, estate liquidation or household liquidation services, any Permitted Products and Services, or any other services that are offered in the franchised business, from any Shared Referral Sources (as defined in Section 8.7 above) or in or within 15 miles of the geographical boundaries of
Franchisee's Territory or in or within 15 miles of any other Caring Transitions franchisee's Territory.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the non-compete agreement lasts for two years after the franchise agreement expires, terminates, or is transferred. The document does not specify any extension or alteration of this two-year period in the event of a violation. However, a violation of the restrictions outlined in Section 1.10 constitutes a material default of the Franchise Agreement.
While the FDD does not explicitly state that a violation extends the non-compete period, franchisees are required to remit all gross receipts earned from prohibited activities to Caring Transitions within 10 days of receiving written notice of the violation. This suggests that Caring Transitions focuses on financial remedies for violations rather than extending the non-compete duration.
Prospective franchisees should seek clarification from Caring Transitions regarding the potential consequences of violating the non-compete agreement. Specifically, it would be prudent to inquire whether any actions, beyond the remittance of gross receipts, could affect the duration or enforcement of the non-compete clause. Understanding the full scope of penalties for non-compliance is crucial for making an informed investment decision.