What are the franchisee's obligations upon termination or non-renewal of the Cinch I.T. franchise agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| 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). |
| d. Termination by franchisee | Section 32 | You must be in full |
| compliance with the terms of | ||
| your Franchise Agreement, | ||
| sign a general release and | ||
| abide by your post | ||
| termination covenants, then | ||
| you may terminate with 180 | ||
| days prior written notice | ||
| (subject to local state law). | ||
| o. Franchisor's option to purchase franchisee's business | Section 35 | If your Franchise Agreement is terminated, we may, but are not obligated to, buy your inventory, supplies and equipment. |
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, after the franchise is terminated or expires, a franchisee is subject to a two-year, 25-mile radius restriction on involvement with any competing business. This restriction's enforcement is subject to state law. Additionally, there is a permanent restriction on using Cinch I.T.'s licensed rights, also subject to state law.
If a Cinch I.T. franchisee chooses to terminate the agreement, they must be in full compliance with the terms of their Franchise Agreement. They must also sign a general release and adhere to post-termination covenants. The franchisee must provide Cinch I.T. with 180 days prior written notice of termination, although this may be subject to local state law.
Furthermore, upon termination of the Franchise Agreement, Cinch I.T. has the option, but not the obligation, to purchase the franchisee's inventory, supplies, and equipment. This provides Cinch I.T. with a way to maintain consistency within the franchise system, but it does not guarantee the franchisee will recoup their investment in these assets.