If a Crawlspace Medic franchise is terminated, is the franchisee required to comply with non-disclosure and non-competition covenants?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
operation; or terminate the Franchise Agreement without cause.
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| i. | Franchisee's obligations on termination/ non-renewal | Article 18 | Upon termination, you must: cease operations; cease to identify yourself as a Crawlspace Medic franchisee; cease to use the Marks; cancel any assumed name registration that contains any Mark; pay us and our affiliates all sums owing; pay us any damages, costs or expenses we incur in obtaining any remedy for any violation of the Franchise Agreement by you, including, but not limited to attorney's fees; deliver to us all Confidential Information, the Operations Manual and all records and files related to your Franchised Business; comply with the non-disclosure and non competition covenants; sell to us, at our option, all furnishing, fixtures, equipment, inventory and supplies of your Franchised Business; and assign, at our option, your telephone numbers, directory and internet listings, and social media and software accounts. We also reserve the right to purchase your business vehicle for the lesser of the current market value or $5,000.00. |
| j. | Assignment of contract by franchisor | Section 16.1.1 | No restrictions on our right to assign. |
| k. | "Transfer" by franchisee defined | Section 16.3 | Any assignment, sale, transfer, gift, devise or encumbrance of any interest in the Franchise Agreement, the Franchised Business, any assets of the Franchised Business, or in the Franchisee (if the Franchisee is a business entity). |
| l. | Franchisor approval of transfer by franchisee | No transfer is allowed without our consent, which we will not unreasonably withhold. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–38)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, a franchisee is required to comply with non-disclosure and non-competition covenants upon termination of the franchise agreement. Specifically, the franchisee must deliver all Confidential Information, the Operations Manual, and all records and files related to the Franchised Business.
Furthermore, for 24 months after the termination of the Franchise Agreement, the franchisee may not divert or attempt to divert customers of any Crawlspace Medic outlet to any competitor. They also cannot participate in any capacity, including as an owner, investor, officer, director, employee, or agent, in any competing business within 25 miles of their former Crawlspace Medic outlet location or any other Crawlspace Medic outlet location, whether franchised or company-owned. Additionally, they are prohibited from any act that could damage the goodwill of the Marks or System, or disrupt or jeopardize Crawlspace Medic's business or that of its franchisees.
These post-termination obligations are typical in franchising to protect the brand's confidential information, customer relationships, and market share. A prospective Crawlspace Medic franchisee should carefully consider these restrictions and how they might impact their future business opportunities should the franchise agreement be terminated.