Does the Closet Storage Concepts non-compete apply if the agreement is not renewed?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
ts 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. Franchisee acknowledges and agrees on its own behalf and on behalf of the persons who are liable under Section 6.4.2 that each has previously worked or been gainfully employed in other fields and that the provisions of Section 6.4.2 in no way prevent any of these persons from earning a living.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the non-compete agreement does apply even if the franchise agreement is not renewed. Specifically, for a period of two years after the expiration, nonrenewal, transfer, or termination of the agreement, the franchisee and their equity owners are restricted from engaging in any Competing Business. This restriction applies regardless of the cause of termination or non-renewal.
This non-compete clause prevents the franchisee from owning, maintaining, or being involved in any business that competes with Closet Storage Concepts within the defined territory or within a 20-mile radius of that territory. It also extends to any other Closet & Storage Concepts or More Space Place company-owned or franchised business that is in operation or for which a franchise agreement has been signed as of the date of expiration, nonrenewal, transfer, or termination. However, the franchisee can continue to operate other Closet Storage Concepts or More Space Place franchises if they have a current franchise agreement with the franchisor.
Additionally, the non-compete clause prohibits the franchisee from soliciting business from customers of their former franchised business for any competitive purpose, as well as soliciting any employee of the franchisor or any other Closet Storage Concepts or More Space Place System franchisee to discontinue their employment. The FDD specifies that spouses of franchisees must also sign a Confidentiality, Non-Disclosure, and Non-Competition Agreement.
Closet Storage Concepts emphasizes the intent to enforce these non-competition provisions to the fullest extent permissible under applicable law, and the franchisor is entitled to an injunction to prevent any actual or threatened breach of these terms. The franchisor also states that harm from a breach would be irreparable and that they would have no adequate remedy at law to prevent the harm. Franchisees acknowledge that these provisions do not prevent them from earning a living, as they have previously worked in other fields.