Is a Cinch I.T. trainee allowed to advise a business similar to Cinch I.T. during their employment?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
Except to the extent prohibited by the laws of the state where the Franchised Business is located or where the Trainee lives or works, in order to protect the goodwill and unique qualities of CINCH I.T.
SYSTEM and the confidentiality and value of Franchisor's Trade Secrets, and in consideration for the disclosure to Trainee of Franchisor's Trade Secrets, Trainee further undertakes and covenants that, during the time he is employed by Franchisee, he will not:
(a) Directly or indirectly, for himself or through, on behalf of or in conjunction with any person, partnership or business entity, engage in or acquire any financial or beneficial interest in (including interest in business entities, partnerships, trusts, unincorporated associations or joint ventures), advise, help or make loans to any entity involved in business which is the same as or similar to that conducted by CINCH I.T. which Business is, or is intended to be located, within the United States; or
(b) Divert or attempt to divert, directly or indirectly, any business, business opportunity or client of Franchisee's Business(s) to any competitor.
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Except to the extent prohibited by the laws of the state where the Franchised Business is located or where the Trainee lives or works, in further consideration for the disclosure to Trainee of Franchisor's Trade Secrets and to protect the uniqueness of CINCH I.T.
SYSTEM, Trainee agrees that for two (2) years following the termination of Trainee's employment with Franchisee, Trainee will not without the prior written consent of Franchisor, divert or attempt to divert, directly or indirectly, any business, business opportunity or client of Franchisee's Franchised Business(s) to any competitor.
Franchisee undertakes to use Franchisee's best efforts to ensure that Trainee acts as required by this Agreement.
Trainee agrees that in the event of a breach of this Agreement, Franchisor would be irreparably injured and be without an adequate remedy at law.
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, a trainee is restricted from advising a similar business during their employment. Specifically, trainees are prohibited from engaging in or acquiring financial interest in, advising, helping, or making loans to any entity involved in a business that is the same as or similar to Cinch I.T. This restriction applies to businesses located within the United States. However, this is only enforced if not prohibited by the laws of the state where the Franchised Business is located or where the Trainee lives or works.
This restriction is put in place to protect the goodwill and unique qualities of the Cinch I.T. system, as well as the confidentiality and value of the franchisor's trade secrets. The trainee acknowledges that the franchisor's trade secrets are being disclosed to them and agrees to these conditions as part of their employment. The franchisee is responsible for ensuring that the trainee adheres to these requirements.
Additionally, trainees are prohibited from diverting or attempting to divert any business, business opportunity, or client of the franchisee's business to any competitor. This further protects the franchisee's interests and the Cinch I.T. system. After the termination of their employment, the trainee is restricted for two years from diverting or attempting to divert business from the franchisee to any competitor without prior written consent from the franchisor, again, unless prohibited by the laws of the state where the Franchised Business is located or where the Trainee lives or works.
These non-compete and non-solicitation agreements are common in franchising to safeguard the franchisor's and franchisee's investments and proprietary information. Prospective franchisees should carefully review these restrictions and understand their implications for employees, as breaches can result in legal action due to the irreparable injury to the franchisor.