During the term of the franchise, what non-competition covenants apply to a Christian Brothers Automotive franchisee?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
to all other remedies available to
Franchisor under this Agreement and at law.
Franchise Agreement (Ver 04-14-2025)
Franchisee: ___________
Franchisor: Christian Brothers Automotive Corporation
- COVENANTS NOT TO COMPETE.
16.01 Best Efforts. During the term of this Agreement, Franchisee covenants and agrees to
expend its best efforts in the operation of the Franchised Business, and shall not engage in
any directly or indirectly conflicting or competing enterprises or any other activities which
would be detrimental to or interfere with the operation, reputation or goodwill of the
Franchised Business, the Franchisor, the System or any other of Franchisor's franchisees.
16.02 Exclusive Relationship; During the Agreement Term. Franchisee specifically
acknowledges that, pursuant to this Agreement, Franchisee will receive valuable,
specialized training and Confidential Information, including information regarding the
operational, sales, promotional, and marketing methods and techniques of Franchisor and
the System. Franchisee covenants that during the term of this Agreement, except as
otherwise approved in writing by Franchisor, Franchisee shall not, either directly or
indirectly, for itself, or through, on behalf of, or in conjunction with any person,
partnership, joint venture, organization or legal entity:
(a) Divert or attempt to divert any present or prospective vendor or Customer of any
Christian Brothers Automotive branded business or franchise to any competitor, 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 and
the System;
(b) Own, maintain, operate, engage in, be employed by, provide any assistance to, or
have any interest in (as owner or otherwise) any Competitive Business. A
"Competitive Business" shall be considered (i) any business which offers or sells
any product or service (or component thereof) which comprises or may in the future
Franchise Agreement (Ver 04-14-2025)
Franchisee: ___________
Franchisor: Christian Brothers Automotive Corporation
comprise a part of the Services or the Franchised Business or which competes
directly or indirectly with the Franchised Business or any franchise of Franchisor;
and/or (ii) any business which is the same or substantially similar to the business
carried on at a franchise of Franchisor, namely a business which generates
substantially all of its revenue from the sale of Services or other products and
services similar to the Services or those offered in the Franchised Business or a
franchisee of Franchisor under the System.
16.03 After the Agreement and After a Transfer. Franchisee covenants that, except as otherwise
approved in writing by Franchisor, for a continuous uninterrupted period of three (3) years
commencing upon the date of: (i) a transfer permitted under Section 13 of this Agreement;
(ii) expiration or termination of this Agreement for any reason; or (iii) a final order of a
duly authorized arbitrator, panel of arbitrators, or a court of competent jurisdiction (after
all appeals have been taken) with respect to any of the foregoing or with respect to
enforcement of this Section 16.03:
(a) Franchisee shall not directly or indirectly, for itself, or through, on behalf of, or in
conjunction with any person, partnership, joint venture, organization or legal entity,
own, maintain, operate, engage in, be employed by, provide assistance to, or have
any interest in (as owner or otherwise) any Competitive Business that is, or is
intended to be, located (i) at the premises of the Franchised Business, (ii) within a
radius of ten (10) miles of the Franchised Business, or (iii) within a radius of ten
(10) miles of any other franchisee of Franchisor or any business owned or operated
by Franchisor. This provision shall not apply to the operation by Franchisee or any
Franchise Agreement (Ver 04-14-2025)
Franchisee: ___________
Franchisor: Christian Brothers Automotive Corporation
principal of Franchisee of any business under the System pursuant to a valid
franchise agreement with Franchisor;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–62)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, franchisees are subject to non-competition covenants during the term of their agreement. Franchisees must expend their best efforts in operating the franchised business and are prohibited from engaging in any conflicting or competing enterprises that could negatively impact the Christian Brothers Automotive system. Franchisees also acknowledge that they will receive specialized training and confidential information and are restricted from diverting vendors or customers to competitors or performing any actions that could harm the goodwill associated with the Christian Brothers Automotive brand.
Specifically, franchisees cannot own, maintain, operate, or have any interest in a "Competitive Business," defined as any business offering products or services that compete directly or indirectly with the Christian Brothers Automotive franchise. This restriction applies unless the franchisor provides written approval. These measures aim to protect the Christian Brothers Automotive system by preventing franchisees from using the franchisor's resources and information to benefit competing businesses.
Christian Brothers Automotive also requires franchisees to ensure that certain individuals, such as service managers, principal operators, and those with significant ownership interests, execute confidentiality agreements and non-compete covenants. This extends the protective measures to those who have access to the franchisor's confidential information and training. However, there is an exception allowing franchisees or their stakeholders to own up to 5% of the equity securities of publicly traded corporations for investment purposes, provided those corporations are registered under the Securities Exchange Act of 1934. The franchisor is entitled to injunctive relief, without posting a bond, for breaches of these non-compete agreements, in addition to other remedies.