What are the consequences for a Closet Storage Concepts franchisee who violates any restrictive covenants?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee fails to comply with the terms of this Section 1.3.4, Franchisor may terminate this Agreement
Further, for a continuous uninterrupted period commencing upon the expiration or termination of the Franchise Agreement or my spouse's affiliation with the Franchisee (whichever occurs first), regardless of the cause for termination, and continuing for two (2) years, I shall not either directly or indirectly, for myself or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, (i) own, maintain, engage in, be employed by or have any interest in a Competing Business within the Territory or a radius of 20 miles from the Territory or any Closet & Storage Concepts or More Space Place company owned or franchised business in operation or for which a franchise agreement has been signed; (ii) own, maintain, engage in, be employed by or have any interest in any company that grants licenses or franchises for a Competing Business; (iii) solicit business from customers of Franchisee's former Franchised Business for any competitive business purpose; or (iv) solicit any employee of Franchisor or any other Closet & Storage Concepts or More Space Place System franchisee to discontinue his or her employment.
I understand and acknowledge that the Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement, or any portion thereof, without my consent, effective immediately upon receipt by me of written notice thereof; and I agree to comply forthwith with any covenant as so modified. I am aware that my violation of this Agreement may cause the Franchisor
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, if a franchisee fails to comply with the terms outlined in Section 1.3.4 of the agreement, Closet Storage Concepts has the right to terminate the Franchise Agreement. This section likely contains specific operational or financial requirements that the franchisee must adhere to.
Additionally, the document states that for a period of two years following the termination or expiration of the Franchise Agreement, the franchisee is restricted from engaging in any competing business within their former territory or within a 20-mile radius of that territory. This restriction also applies to any Closet Storage Concepts or More Space Place company-owned or franchised business. The franchisee is also prohibited from soliciting business from customers of their former Closet Storage Concepts franchise or soliciting employees of Closet Storage Concepts or its franchisees.
Closet Storage Concepts also has the right to modify the scope of any covenant set forth in the agreement without the franchisee's consent, effective immediately upon written notice. Furthermore, the franchisee's violation of the agreement may cause damage to Closet Storage Concepts. These measures are in place to protect Closet Storage Concepts' market position, brand reputation, and confidential information.