Does the Crawl Space Ninja Covenantor acknowledge that the covenants impose undue hardship on them?
Crawl_Space_Ninja Franchise · 2024 FDDAnswer from 2024 FDD Document
c. The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
d. If the period of time or the geographic scope specified Section 2.b. above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
In addition, 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 Covenantor's or Franchisee's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to the 2024 Crawl Space Ninja Franchise Disclosure Document, the Covenantor acknowledges the reasonableness of the non-compete covenants. Specifically, the Covenantor agrees that the limitations regarding time, geographical area, and scope of activity are reasonable and do not create an undue hardship.
This agreement indicates that the Covenantor, who is typically an employee or associate of the franchisee, understands and accepts the restrictions placed upon them. These restrictions are designed to protect Crawl Space Ninja's goodwill and confidential information. The agreement also states that these restrictions are considered necessary to protect the franchisor's business interests.
Furthermore, the document provides a mechanism for modifying the non-compete terms if they are deemed unreasonable in any legal proceeding. In such cases, the terms can be reduced in time or geographic scope to ensure enforceability. Crawl Space Ninja also retains the right to unilaterally reduce the scope of any covenant, providing flexibility in managing these restrictions.
This acknowledgement is important for prospective franchisees as it confirms that individuals associated with their franchise operation are bound by these non-compete obligations. It also highlights the franchisor's efforts to ensure that these covenants are fair and enforceable, which can be a crucial factor in protecting the Crawl Space Ninja system.