Does the Closet Storage Concepts agreement survive the termination of the franchise agreement?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
of the cause, neither Franchisee, nor its equity owners shall, directly or indirectly, for itself or through, on behalf of, or in conjunction with any other person, partnership or corporation own, maintain, engage in, be employed by, or have any interest in any company which grants franchises or licenses for any business competing in whole or in part with Franchisor.
6.4.2 After the Term of This Agreement. For a period of 2 years after the expiration, nonrenewal, transfer or termination of this Agreement, regardless of the cause, neither Franchisee, nor its equity owners shall, directly or indirectly, for itself or through, on behalf of, or in conjunction with any other person, partnership or corporation own, maintain, engage in, be employed by, or have any interest in any other Competing Business within the Territory or a radius of 20 miles from the Territory or any other Closet & Storage Concepts or More Space Place company owned or franchised business in operation or for which a franchise agreement has been signed, as of the date of expiration and nonrenewal, transfer or termination of this Agreement; provided, however, Franchisee may continue to operate any other Closet & Storage Concepts or More Space Place franchises for which Franchisee and Franchisor have a current franchise agreement.
For a period of 2 years after the expiration, nonrenewal, transfer or termination of this Agreement,
regardless of the cause, neither Franchisee, nor its equity owners shall, directly or indirectly, for itself or through, on behalf of, or in conjunction with any other person, partnership or corporation solicit business from customers of Franchisee's former Franchised Business for any competitive business purpose nor solicit any employee of Franchisor or any other Closet & Storage Concepts or More Space Place System franchisee to discontinue his or her employment.
For a period of 2 years after the expiration and nonrenewal, transfer or termination of this Agreement, regardless of the cause, neither Franchisee, nor its equity owners shall, directly or indirectly, for itself or through, on behalf of, or in conjunction with any other person, partnership or corporation own, maintain, engage in, be employed by, or have any interest in any company which grants franchises or licenses for any business competing in whole or in part with Franchisor.
- 6.4.3 Intent and Enforcement. It is the intent of the parties that the provisions of this Section 6.4 shall, to the fullest extent permissible under applicable law, be judicially enforced; accordingly, any reduction in scope or modification of any part of the noncompetition provisions contained in this Agreement shall not render any other part unenforceable. In the event of the actual or threatened breach of this Section 6.4 by Franchisee, or any of its equity owners, Franchisor shall be entitled to an injunction restraining such person from any such actual or threatened breach. In the event of the actual or threatened breach of this Section 6.4, Franchisor's harm shall be irreparable and Franchisor shall have no adequate remedy at law to prevent the harm.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to the 2025 Closet Storage Concepts Franchise Disclosure Document, certain obligations do survive the termination of the franchise agreement. Specifically, the non-competition provisions outlined in the agreement remain in effect for a period of two years after the expiration, nonrenewal, transfer, or termination of the agreement, regardless of the cause. This means that for two years post-termination, neither the franchisee nor their equity owners can engage in any Competing Business within the Territory or within a 20-mile radius of it. They are also restricted from involvement with any other Closet & Storage Concepts or More Space Place company-owned or franchised business.
This non-compete clause prevents the franchisee from leveraging the knowledge and experience gained during their time with Closet Storage Concepts to directly compete with the franchise system shortly after their departure. The franchisee is also prohibited from engaging in a company that grants licenses or franchises for any business competing with Closet Storage Concepts. This restriction is designed to protect Closet Storage Concepts' market position and prevent former franchisees from using the franchisor's confidential information and business model to create competing franchise systems.
Furthermore, the franchisee is prohibited from soliciting business from customers of their former franchised business for any competitive purpose and from soliciting any employee of Closet Storage Concepts or any other Closet & Storage Concepts or More Space Place System franchisee to discontinue their employment. However, the franchisee may continue to operate any other Closet & Storage Concepts or More Space Place franchises for which the franchisee and franchisor have a current franchise agreement. Also, when transferring a franchise, the post-termination provisions of the agreement, including the noncompetition provisions, survive the transfer of the Franchise.
These stipulations ensure that Closet Storage Concepts can maintain its competitive edge and protect its franchisees and trade secrets even after a franchise agreement ends. Prospective franchisees should carefully consider these post-termination restrictions and how they might impact their future business endeavors before entering into a franchise agreement with Closet Storage Concepts.