Does the Cinch I.T. agreement specify any non-compete restrictions after the franchise is terminated or expires?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| q. Non-competition covenants during the term of the franchise | Section 27 | No involvement with competing business is allowed anywhere in the United States (subject to state law). |
| r. Non-competition covenants after the franchise is terminated or expires | Sections 27 and 35 | Two year and 25 mile radius restriction on competing business. Permanent restriction on using licensed rights (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 48–56)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, there are indeed post-term non-compete restrictions. Specifically, for two years after the franchise agreement is terminated or expires, the franchisee is restricted from engaging in a competing business within a 25-mile radius of their former Cinch I.T. location.
In addition to the geographic and time-based restrictions, the FDD states that there is a permanent restriction on using Cinch I.T.'s licensed rights after the termination or expiration of the franchise agreement. This means a former franchisee can never use Cinch I.T.'s trademarks, service marks, or other intellectual property, even after the two-year non-compete period has ended.
It is important to note that these non-competition covenants, both during and after the franchise term, are subject to state law. This means that the enforceability and specific terms of the non-compete agreements can vary depending on the state in which the Cinch I.T. franchise operates. Prospective franchisees should consult with legal counsel to understand the specific non-compete restrictions in their state and how they may impact their future business opportunities.