What activities are Chem Dry franchisees and their owners prohibited from engaging in during the non-compete period?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon termination or expiration of this Agreement, FRANCHISEE and its Owner(s) agree that for a period of two (2) years, commencing on the effective date of termination or expiration, or the date on which FRANCHISEE actually ceases to conduct the business described in this Agreement, whichever is later, neither FRANCHISEE nor its owner(s) will (a) participate in or have any direct or indirect interest (e.g., through a spouse) as a disclosed or beneficial owner, investor, lender, partner, director, officer, manager, consultant, employee, representative or agent, or in any other capacity, in any Competitive Business, (b) solicit business from customers of the BUSINESS or contact any of our suppliers or vendors for any Competitive Business purpose, or (c) divert or attempt to divert any business or customer from the BUSINESS to any Competitive Business, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks or the System, within:
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- The Franchised Area as defined in this Agreement;
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- The geographic area encompassed by the Franchised Area(s) of any Chem-Dry Business as of the date of the termination or expiration of this Agreement; or
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- A geographic area that is contained in a circle having a radius of 10 miles outward from the outside boundary of the Franchised Area as defined in this Agreement.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, both the franchisee and their owners face specific restrictions for two years after the franchise agreement terminates or expires. This non-compete period begins on the termination or expiration date, or when the franchisee stops conducting business, whichever is later.
During this time, franchisees and their owners cannot participate in any Competitive Business. This includes having any direct or indirect interest as an owner, investor, lender, partner, director, officer, manager, consultant, employee, representative, or agent. They are also prohibited from soliciting business from existing Chem Dry customers or contacting Chem Dry's suppliers or vendors for any Competitive Business purpose.
Furthermore, franchisees and their owners cannot divert or attempt to divert any business or customer from Chem Dry to a Competitive Business, whether through direct or indirect means. They are also barred from any action that could harm the goodwill associated with Chem Dry's trademarks or the Chem Dry system. These restrictions apply within the original Franchised Area, any Chem Dry Business's Franchised Area as of the termination date, and within a 10-mile radius of the Franchised Area's boundary.