Can Clear Pest Pros initiate litigation in court for disputes involving restrictive covenants?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
Arbitration Rules then in effect, and with a mutually agreeable arbitrator with at least five (5) years of franchise law experience. Each party shall bear its own cost of arbitration and you and we shall share costs imposed by the arbitrator equally. This agreement to arbitrate shall survive any termination or expiration of this Agreement.
-
- Notwithstanding the foregoing, we shall not be required to arbitrate, and may initiate litigation in court, in accordance with the procedure set forth in Section 15.F.4 any controversy, dispute, or claim as set forth in this Section 15.F.3 if such controversy, dispute, or claim concerns an allegation that you have violated (or threaten to violate, or pose an imminent risk of violating):
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to Clear Pest Pros' 2025 Franchise Disclosure Document, Clear Pest Pros is not required to arbitrate and may initiate litigation in court for disputes involving a franchisee's violation, threatened violation, or imminent risk of violating the in-term restrictive covenant outlined in Section 6 of the franchise agreement. This means that Clear Pest Pros reserves the right to pursue legal action through the court system rather than being bound to arbitration for such specific violations.
This clause is significant for prospective franchisees as it clarifies the legal avenues available to Clear Pest Pros in the event of a breach of the restrictive covenant. Restrictive covenants typically limit a franchisee's ability to compete with the franchisor during and after the franchise term, aiming to protect the franchisor's market share and proprietary information. The ability to litigate in court provides Clear Pest Pros with a potentially faster and more direct route to enforce these covenants and seek remedies such as injunctions or damages.
However, it is important to note that this right to initiate litigation is not absolute. The FDD specifies that Clear Pest Pros has the option to pursue litigation, but it is not obligated to do so. Clear Pest Pros may still choose to pursue arbitration or other dispute resolution methods. Additionally, the specific terms and enforceability of the restrictive covenant itself will be subject to applicable state laws, which can vary significantly. For instance, the FDD includes a specific amendment for franchisees in North Dakota, acknowledging that covenants not to compete are generally considered unenforceable in that state, though Clear Pest Pros intends to seek enforcement to the extent allowed by law.
Prospective franchisees should carefully review Section 6 of the franchise agreement to fully understand the scope and limitations of the restrictive covenant. They should also consult with legal counsel to assess the enforceability of these covenants in their specific jurisdiction and to understand the potential implications of Clear Pest Pros' right to initiate litigation in the event of a dispute.