After the Cinch I.T. franchise is terminated or expires, what is the radius of the non-competition restriction?
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 franchisee is subject to a non-competition covenant. This covenant restricts the franchisee from engaging in a competing business within a 25-mile radius of their former Cinch I.T. location. This restriction is in place for two years following the termination or expiration of the franchise agreement.
In addition to the geographic and time-based restrictions, there is a permanent restriction on using Cinch I.T.'s licensed rights. This means that even after the two-year non-compete period expires, the former franchisee cannot use any of Cinch I.T.'s proprietary materials, systems, or intellectual property.
These non-competition terms are subject to state law, which means the enforceability and specific interpretation of these clauses can vary depending on the state in which the franchise operates. Prospective franchisees should consult with legal counsel to understand the specific implications of these non-competition covenants in their state.