Does the Closet Storage Concepts non-compete apply if the agreement is terminated?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Spouses of Franchisees must sign the Confidentiality, Non-Disclosure and Non-Competition Agreement in the form attached as Exhibit "3(b)".
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts's 2025 Franchise Disclosure Document, the non-compete agreement extends beyond the termination of the franchise agreement. 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 includes owning, maintaining, engaging in, being employed by, or having any interest in a Competing Business within the defined territory or within a 20-mile radius of it. It also applies to 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. Furthermore, franchisees are prohibited from soliciting business from customers of their former franchised business for any competitive purpose and from soliciting employees of Closet Storage Concepts or other franchisees within the system.
Spouses of franchisees are also required to sign a Confidentiality, Non-Disclosure, and Non-Competition Agreement, indicating that these restrictions also apply to them. Closet Storage Concepts has the right to seek an injunction to prevent any actual or threatened breach of these non-competition terms, acknowledging that any violation would cause irreparable harm for which there is no adequate legal remedy. The FDD states that these non-compete provisions are intended to be enforced to the fullest extent permissible under applicable law, and any modification of one part of the non-competition provisions does not render any other part unenforceable.