After the Cinch I.T. franchise is terminated or expires, for how long does the non-competition covenant last?
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 Cinch I.T.'s 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the non-competition covenant lasts for two years within a 25-mile radius of the previous business location. Additionally, there is a permanent restriction on using licensed rights, which is subject to state law.
This means that after the franchise agreement ends, a former franchisee cannot operate a competing business within a 25-mile radius for two years. This restriction aims to protect Cinch I.T.'s market share and customer base. The permanent restriction on using licensed rights prevents the franchisee from continuing to use Cinch I.T.'s trademarks, systems, and other intellectual property.
The enforceability of non-competition agreements can vary by state, so a prospective franchisee should consult with a legal professional to understand the specific regulations in their area. It is also important to note that these restrictions are outlined in Sections 27 and 35 of the franchise agreement, so franchisees should carefully review those sections to fully understand their obligations.