After the Crawlspace Medic agreement expires or terminates, for how many months are franchisees prohibited from diverting business to competitors?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 19.5.2.
Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Franchisee and Principals, if any, shall not, either directly or indirectly, for themselves or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of the Franchised Business 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) seek to employ any person who is at that time employed by Franchisor or otherwise induce such person to leave his or her employment or (iv) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (v) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Crawlspace Medic franchisees.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, franchisees and their principals are restricted from diverting business to competitors for a period of 24 months following the expiration or termination of the franchise agreement. This restriction applies to directly or indirectly diverting business or customers of the franchised business or other franchisees within the Crawlspace Medic system.
In practical terms, this means that for two years after a Crawlspace Medic franchise agreement ends, the former franchisee cannot actively solicit or take away customers from the Crawlspace Medic network. This includes actions like directly contacting Crawlspace Medic customers to offer competing services or indirectly incentivizing them to switch to a different provider. The franchisee is also prohibited from participating in any crawlspace or basement service business within 25 miles of their former territory or any Crawlspace Medic location.
This non-compete clause is designed to protect Crawlspace Medic's customer base and the goodwill associated with its brand. The FDD states that these restrictions are considered fair and reasonable, as franchisees are expected to have other skills and experiences that allow them to earn income from other ventures. However, the agreement also includes a provision that allows for the time or geographic scope of these restrictions to be reduced if deemed unreasonable in any legal proceeding. Additionally, Crawlspace Medic retains the right to reduce the scope of any covenant without the franchisee's consent.
Prospective franchisees should carefully consider the implications of this non-compete agreement. While it is intended to protect the Crawlspace Medic system, it also places limitations on the franchisee's ability to operate a similar business after leaving the franchise. It is advisable to seek legal counsel to fully understand the terms and potential impact of this clause.