Does the Crawlspace Medic agreement allow for the enforcement of a Developer's post-termination obligations, including non-competition covenants?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Crawlspace Medic developers or franchisees or Franchisoraffiliated outlets.
- 8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of Developer's Crawlspace Medic outlets or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or
serve in any other capacity in any crawlspace or basement service business within twenty-five (25) miles of the Territory or any Crawlspace Medic location; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Crawlspace Medic developers or franchisees.
- 8.4 Reasonableness of Restrictions. Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope. If the period of time or the geographic scope specified 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 Article 8 or any portion thereof, without Developer's consent, effective immediately upon receipt by Developer of written notice thereof, and Developer agrees to forthwith comply with any covenant as so modified.
- 8.6 Injunctive Relief. Developer acknowledges that a violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to Franchisor for which no adequate remedy at law will be available.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, the agreement includes non-competition covenants that are enforceable post-termination. As a Crawlspace Medic developer, you are restricted from engaging in activities that compete with the Crawlspace Medic system, both during the term of the agreement and for a period of 24 months after termination or transfer. This includes soliciting customers, participating in similar businesses, or acting in ways that harm the goodwill of the Crawlspace Medic brand. These restrictions apply within 25 miles of the territory or any Crawlspace Medic location.
The Crawlspace Medic agreement specifically states that violating these non-compete terms would cause immediate and irreparable harm to Crawlspace Medic, allowing them to seek an injunction to prevent further violations. The agreement also emphasizes that any claims a developer may have against Crawlspace Medic will not serve as a defense against the enforcement of these covenants. This highlights the importance Crawlspace Medic places on protecting its market and brand reputation.
The agreement also includes a provision for adjusting the non-compete terms if they are deemed unreasonable. A court can reduce the time period or geographic scope to make the restrictions enforceable. Crawlspace Medic also retains the right to reduce the scope of any covenant, providing written notice to the developer. This flexibility aims to ensure the enforceability of the non-compete provisions while protecting Crawlspace Medic's interests. This is a fairly common practice in franchising, as franchisors seek to protect their brand and market presence while also ensuring the non-compete terms are reasonable and enforceable.