Is the Crawlspace Medic agreement personally binding on the franchisee?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
- 19.5.1.
During the term of this Agreement, Franchisee and each Principal, 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; (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 similar to the System; 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 or Franchisor-affiliated outlets.
- 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.
- 16.2. Restrictions on Transfers by Franchisee. Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval. Franchisor may void any transfer made without such approval.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, the franchise agreement places certain obligations and restrictions on both the franchisee and its principals. Specifically, the agreement outlines non-compete covenants that apply during the term of the agreement and for a period of time after termination or transfer. These covenants restrict the franchisee and principals from engaging in activities that could harm the Crawlspace Medic system.
The Crawlspace Medic agreement states that the franchisee's rights and duties are personal, based on the franchisor's assessment of the individuals involved. This means that the franchisor is relying on the character, skills, and financial capacity of the franchisee and its principals when entering into the agreement. Consequently, any transfer of the agreement requires the franchisor's prior written approval, and the franchisor can void unapproved transfers.
The non-compete clauses in the Crawlspace Medic agreement prevent the franchisee and principals from diverting business, participating in similar businesses, or soliciting employees of the franchisor. These restrictions apply both during the term of the agreement and for a specified period afterward, within a defined geographic area. The agreement also includes provisions for adjusting the time or scope of these restrictions if they are deemed unreasonable, ensuring they are enforceable while protecting the franchisor's interests.