Does the Chem-Dry franchise agreement prohibit a franchisee from soliciting existing customers of the Chem-Dry business to divert business to a Competitive Business?

According to Chem-Dry's 2024 Franchise Disclosure Document, the franchise agreement does address the solicitation of existing customers. Specifically, it states that franchisees are prohibited from soliciting existing customers of the Chem-Dry business, or any party the business has communicated with for marketing purposes, to divert business to a Competitive Business. This restriction applies to the franchisee, their owners, managers, officers, partners, directors (if the franchisee is an entity), and their respective spouses and adult offspring.

The Chem-Dry franchise agreement defines a "Competitive Business" as any business that provides or sells carpet or upholstery/drapery cleaning services or products, tile and stone care services or products, spot removal, applying anti-allergen and deodorizer, protective services or products, Approved Services, or any related services or products. This definition is important because it clarifies the scope of businesses that a Chem-Dry franchisee is restricted from diverting business to.

This restriction is in place during the term of the Franchise Agreement. This means that while a Chem-Dry franchisee is operating under the Chem-Dry brand, they cannot actively try to take Chem-Dry customers and move them to a competing business. This is a fairly standard clause in franchise agreements, designed to protect the brand and the customer base that franchisees benefit from. This clause aims to protect Chem-Dry's confidential information and goodwill by preventing franchisees from using their knowledge of the Chem-Dry system and customer relationships to benefit a competing business.