Does a Cool Binz franchisee have to comply with post-term non-competition covenants after termination?

Question

Accepted Answer

|    | Provisions                                                    | Section in Franchise Agreement | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----|---------------------------------------------------------------|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  |  | or any other lien is placed against you and not released or bonded within 30 days; (xx) you become insolvent; (xxi) you order or purchase supplies, signs, furnishings, fixtures, equipment or inventory from an unapproved supplier; (xxii) you misuse or make unauthorized use of any COOL BINZ /Required Software; (xxiii) you fail to comply with the anti-terrorism provision; (xxiv) you take for your own personal use any assets or property of the COOL BINZ Business; or (xxv) if there are insufficient funds in your bank account to cover a check or EFT payment 3 or more times within any 12-month period or you fail to achieve minimum sales for 3 consecutive months. These provisions are subject to state law. |
| i. | Franchisee's obligations on termination/no n-renewal | Section 13 | Upon termination or early expiration of the Franchise Agreement, your obligations include: (i) pay all amounts owed to us; (ii) de identify and otherwise stop using the Marks in any manner, including in business names and telephone listings; (iii) return all Confidential Information and customer lists to us; (iv) comply with post-term non-competition covenants; and (v) deliver proof of compliance. |
| j. | "Transfer" by franchisor | Section 10.A | No restriction on our right to assign. |
| k. | "Transfer" by franchisee – definition | Section 10.B | Includes transfer or assignment of the Franchise Agreement, the COOL BINZ Business or any part thereof, and change of your ownership in the franchisee entity and/or COOL BINZ Business. |
| l. | Franchisor's approval of transfer by franchisee | Section 10.B | We must approve all transfers, but we will not unreasonably withhold our approval if you meet our conditions. |
| m. | Conditions for franchisor approval of transfer | Section 10.B | Conditions to transfer: (i) you are in full compliance with the Franchise Agreement or any agreement between you and us, our affiliates, or our designated/approved supplies and vendors, and you have paid all accrued monetary obligations to us, our affiliates, and our designated/approved supplies and vendors; (ii) the transferee meets our then current standards; (iii) the transferee is not operating a competitive business, unless all competitive services as part of the COOL BINZ Business; (iv) you permit us to release to the transferee information about the COOL BINZ Business; (v) transferee signs the then-current form of franchise agreement; (vi) you guarantee the performance of transferee if you finance the sale/assignment; (vii) you pay us a transfer fee, all Royalties and other fees owed, and all commissions, referral and broker fees, if applicable; (viii) transferee completes training; (ix) transferee assumes all obligations to customers and clients; (x) you and the transferee sign a general release (such requirement to sign a general release is subject to change in our sole discretion);

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–58)

Does a Cool Binz franchisee have to comply with post-term non-competition covenants after termination?

Answer from 2025 FDD Document

What This Means (2025 FDD)

	Provisions	Section in Franchise Agreement	Summary
			or any other lien is placed against you and not released or bonded within 30 days; (xx) you become insolvent; (xxi) you order or purchase supplies, signs, furnishings, fixtures, equipment or inventory from an unapproved supplier; (xxii) you misuse or make unauthorized use of any COOL BINZ /Required Software; (xxiii) you fail to comply with the anti-terrorism provision; (xxiv) you take for your own personal use any assets or property of the COOL BINZ Business; or (xxv) if there are insufficient funds in your bank account to cover a check or EFT payment 3 or more times within any 12-month period or you fail to achieve minimum sales for 3 consecutive months. These provisions are subject to state law.
i.	Franchisee's obligations on termination/no n-renewal	Section 13	Upon termination or early expiration of the Franchise Agreement, your obligations include: (i) pay all amounts owed to us; (ii) de identify and otherwise stop using the Marks in any manner, including in business names and telephone listings; (iii) return all Confidential Information and customer lists to us; (iv) comply with post-term non-competition covenants; and (v) deliver proof of compliance.
j.	"Transfer" by franchisor	Section 10.A	No restriction on our right to assign.
k.	"Transfer" by franchisee – definition	Section 10.B	Includes transfer or assignment of the Franchise Agreement, the COOL BINZ Business or any part thereof, and change of your ownership in the franchisee entity and/or COOL BINZ Business.
l.	Franchisor's approval of transfer by franchisee	Section 10.B	We must approve all transfers, but we will not unreasonably withhold our approval if you meet our conditions.
m.	Conditions for franchisor approval of transfer	Section 10.B	Conditions to transfer: (i) you are in full compliance with the Franchise Agreement or any agreement between you and us, our affiliates, or our designated/approved supplies and vendors, and you have paid all accrued monetary obligations to us, our affiliates, and our designated/approved supplies and vendors; (ii) the transferee meets our then current standards; (iii) the transferee is not operating a competitive business, unless all competitive services as part of the COOL BINZ Business; (iv) you permit us to release to the transferee information about the COOL BINZ Business; (v) transferee signs the then-current form of franchise agreement; (vi) you guarantee the performance of transferee if you finance the sale/assignment; (vii) you pay us a transfer fee, all Royalties and other fees owed, and all commissions, referral and broker fees, if applicable; (viii) transferee completes training; (ix) transferee assumes all obligations to customers and clients; (x) you and the transferee sign a general release (such requirement to sign a general release is subject to change in our sole discretion);