After the Crawlspace Medic agreement expires or terminates, for how long is the developer restricted from diverting business from other Crawlspace Medic franchisees?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, a developer is restricted from diverting business from other Crawlspace Medic franchisees for 24 months after the expiration or termination of the agreement. Specifically, the developer cannot directly or indirectly divert or attempt to divert any business or customer from their Crawlspace Medic outlets or other franchisees within the system to any competitor. This restriction is in place to protect Crawlspace Medic's business interests and goodwill.
In addition to not diverting business, the developer is also prohibited from participating in any crawlspace or basement service business within 25 miles of the Territory or any Crawlspace Medic location during this 24-month period. This includes involvement as an owner, partner, director, officer, employee, consultant, or agent. The developer is also restricted from performing any action that could be harmful or prejudicial to the goodwill associated with the Crawlspace Medic marks and system, or interfering with the business of Crawlspace Medic or its franchisees.
The Crawlspace Medic agreement states that these non-compete covenants are considered fair and reasonable, as the developer possesses other skills, experience, and education that allow them to pursue income from other ventures. However, if any court deems the time period or geographic scope unreasonable, adjustments can be made to reduce the restrictions to an enforceable level. Crawlspace Medic also retains the right to reduce the scope of any covenant at its discretion with written notice to the developer.
These restrictions are common in franchising to protect the brand and prevent franchisees or developers from using the franchisor's knowledge and resources to compete against the system shortly after leaving. Prospective Crawlspace Medic developers should carefully consider these post-term restrictions and how they might impact their future business opportunities.