After the Chem Dry franchise is terminated or expires, what geographic area is covered by the non-competition covenant?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise Agreement and other agreements | ||
| n. CDI's right of first | Section 13F | CDI can match any offer within 30 days |
| refusal to acquire your business | of notice of the terms and conditions of the offer | |
| o. | Section 13D | Upon notification of your death or |
| CDI's | ||
| option | ||
| to | ||
| purchase your business | permanent incapacity or within 6 months thereafter | |
| p. | Section 13D | We can buy your Chem-Dry Business, |
| Your death or disability | and if we do not, your franchise or entity equity must be assigned to approved person within 6 months | |
| q. Non-competition covenants during the term of the | Section 6 | No interest in or performing the Approved Services for, a competitive |
| franchise | business (defined as any business which provides or sells, or grants franchises or licenses to others to provide or sell, carpet or upholstery/drapery cleaning services or products, tile/stone care or other hard floor surface cleaning services or products, spot removal, or protective services or products, or any related ancillary services or products) | |
| r. Non-competition covenants after the franchise is | Section 16D | No competing business for 2 years within Franchised Area or 10 miles of |
| terminated or expires | Franchised Area. No franchising, licensing, manufacturing, or selling similar products, equipment, or services for 2 years within Franchised Area or any Chem-Dry Business franchised area. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 51–55)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This covenant restricts the franchisee from engaging in any competing business for a period of two years.
The geographic scope of this restriction includes two areas. First, the franchisee cannot operate a competing business within the defined Franchised Area. Second, the franchisee is prohibited from operating a competing business within a 10-mile radius of the Franchised Area.
In addition to restrictions on operating a competing business, the franchisee is also restricted from involvement in franchising, licensing, manufacturing, or selling similar products, equipment, or services. This restriction applies for two years within the Franchised Area and any Chem-Dry Business franchised area. This broad restriction aims to prevent former franchisees from leveraging their knowledge and experience to directly compete with Chem Dry or support competing ventures within the Chem Dry network.