What agreement regarding future activities must the Chem Dry franchisee and its owners make during a transfer?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
- t.
FRANCHISEE and its transferring Owners (and any spouses or other immediate family members) acknowledge in a writing delivered to CDI that each of them will not, for two (2) years beginning on the transfer's effective date, engage in any of the activities proscribed in Section 16.D. below;
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, when a franchisee transfers their business, both the franchisee and their transferring owners must agree in writing not to engage in activities proscribed in Section 16.D for two years following the transfer date. This agreement must be delivered to Chem Dry.
In practical terms, this means that for a period of two years after selling their Chem Dry franchise, the former franchisee and their owners are restricted from certain competitive activities. The specific activities are detailed in Section 16.D, which is not provided in the excerpt, but typically include things like starting a competing business or soliciting customers from the Chem Dry business.
This non-compete agreement is a standard practice in franchising to protect the brand and the new franchisee's investment. It ensures that the previous owner doesn't immediately leverage their existing knowledge and relationships to undermine the business they just sold. Prospective franchisees should carefully review Section 16.D of the Franchise Agreement to fully understand the scope of these restrictions before transferring ownership.