Does the Closet Storage Concepts agreement survive 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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to the 2025 Closet Storage Concepts Franchise Disclosure Document, certain obligations continue even after the franchise agreement terminates. Specifically, the non-competition covenant outlined in section 6.4.2 remains in effect for a period of two years following the expiration, nonrenewal, transfer, or termination of the agreement, regardless of the reason for termination. This means that for two years after the agreement ends, neither the franchisee nor their equity owners can engage in any Competing Business within the Territory or within a 20-mile radius of it. This restriction also applies to any other Closet & Storage Concepts or More Space Place company-owned or franchised business that was in operation or had a signed franchise agreement as of the termination date.
This non-compete clause prevents a former Closet Storage Concepts franchisee from leveraging the knowledge and experience gained during their franchise term to directly compete with the brand. However, there is an exception: a franchisee can continue to operate other Closet & Storage Concepts or More Space Place franchises if they have a current franchise agreement with the company.
Additionally, the FDD states in section 7.3.2.9 that the post-termination provisions of the agreement, including the noncompetition provisions, survive the transfer of the franchise. This is contingent upon the franchisor, franchisee, and transferee entering into a transfer agreement approved by Closet Storage Concepts. This ensures that the non-compete obligations remain enforceable even if the franchise is sold to a new owner.