What is the scope of the non-compete agreement regarding Closet Storage Concepts?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
6.4 Noncompetition.
6.4.1 During the Term of This Agreement. During the term of this Agreement, 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 business which offers or sells products or services competitive with those sold or offered under the Closet & Storage Concepts System or the More Space Place System (a "Competing Business").
During the term 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.
6.4.2 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.
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 the 2025 Closet Storage Concepts Franchise Disclosure Document, the non-compete agreement has different scopes during and after the franchise term.
During the term of the Franchise Agreement, the franchisee and their equity owners are prohibited from owning, maintaining, engaging in, being employed by, or having any interest in any business that competes with the Closet & Storage Concepts System or the More Space Place System. This restriction applies whether the involvement is direct or indirect, for themselves or in conjunction with others. They are also restricted from involvement with any company that grants franchises or licenses for businesses that compete with Closet Storage Concepts.
After the termination, expiration, nonrenewal, or transfer of the Franchise Agreement, the non-compete extends for two years. During this period, the franchisee and their equity owners are restricted from engaging in any Competing Business within their former territory, or within a 20-mile radius of that territory. The restriction also applies to any other Closet & Storage Concepts or More Space Place business that was company-owned or franchised at the time of termination. However, the franchisee can continue to operate any other Closet & Storage Concepts or More Space Place franchises they have a current agreement for. Additionally, for two years post-termination, franchisees are prohibited from soliciting business from customers of their former Closet Storage Concepts franchise or soliciting employees of Closet Storage Concepts or its franchisees.
The FDD states that Closet Storage Concepts intends for these non-compete provisions to be enforced to the fullest extent permissible by law. A franchisee's spouse must also sign a Confidentiality, Non-Disclosure and Non-Competition Agreement. Closet Storage Concepts states that any breach of these non-compete terms would cause irreparable harm, entitling them to injunctive relief. Franchisees acknowledge that the non-compete terms do not prevent them or their equity owners from earning a living, as they have likely worked in other fields previously.