What is the geographic scope of the non-compete agreement for Crawlspace Medic Covenantors after termination of employment?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
(ii) participate as an owner, partner, director, officer, employee, or consultant or serve in any other managerial, operational or supervisory capacity in any crawlspace or basement service business within the within twenty-five (25) miles of Franchisee's Territory or any Crawlspace Medic location.
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
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic FDD, a Covenantor, upon termination of employment or association with a Crawlspace Medic franchisee, is subject to a non-compete agreement. This agreement restricts the Covenantor from engaging in any crawlspace or basement service business within twenty-five (25) miles of the franchisee's territory or any Crawlspace Medic location. This restriction is in place for a period of twenty-four (24) months following the termination of employment or association.
The non-compete clause aims to protect Crawlspace Medic's goodwill and unique qualities of the system, especially considering the Covenantor's access to confidential information during their employment. The agreement prevents the Covenantor from diverting business or customers from the Crawlspace Medic system to competitors within the specified geographic area.
The FDD also states that the franchisor has the right to reduce the scope of any covenant set forth in the agreement or any portion thereof, without the Covenantor's or franchisee's consent. This modification becomes effective immediately upon the Covenantor receiving written notice and the Covenantor is expected to comply with the modified covenant. If any part of the non-compete agreement is deemed unreasonable, the terms will be adjusted to be enforceable.
Prospective franchisees should be aware of these restrictions and ensure that their employees or associates fully understand the terms of the Covenant Agreement. Franchisees should consult with legal counsel to fully understand the implications of these non-compete provisions and how they apply to their specific circumstances and location.