After the Chem Dry franchise is terminated or expires, for how long is the non-competition covenant in effect?
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, the non-competition covenant remains in effect for a period of two years after the franchise is terminated or expires. During this time, the franchisee is restricted from engaging in any competing business within their Franchised Area or within 10 miles of it.
This restriction includes not only operating a competing carpet or upholstery cleaning service but also extends to franchising, licensing, manufacturing, or selling similar products, equipment, or services. The geographic scope includes the franchisee's previously held territory and any other Chem-Dry franchised area.
This non-compete clause is a standard measure in franchising to protect the brand and other franchisees from unfair competition by former franchisees who may have gained knowledge and experience while operating under the Chem-Dry name. Prospective franchisees should carefully consider the implications of this restriction, especially if they plan to remain in the same geographic area after the franchise agreement ends.