If a Crawlspace Medic franchisee's manager leaves the company, does the Non-Disclosure/Non-Competition Agreement still apply?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
anner 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.
- 19.6. Reasonableness of Restrictions.
Source: Item 15 — OBLIGATIONS OF THE FRANCHISEE TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2024 FDD)
The 2024 Crawlspace Medic Franchise Disclosure Document (FDD) outlines non-disclosure and non-competition covenants that apply to the franchisee and any principals involved in the franchise. These covenants address the use and protection of confidential information, as well as restrictions on competitive activities during the term of the agreement and for a period of time after termination or transfer. However, the FDD does not explicitly state whether these covenants extend to a franchisee's manager who leaves the company.
According to the FDD, the franchisee acknowledges that they will receive valuable training, trade secrets, and confidential information that are beyond their present knowledge. In consideration for this, the franchisee agrees not to divert business, participate in similar businesses, or employ individuals associated with Crawlspace Medic during the term of the agreement. After the agreement ends, these restrictions continue for 24 months within a 25-mile radius of the territory or any Crawlspace Medic location. These restrictions are deemed reasonable because the franchisee has other skills and experience to derive income from other endeavors.
Since the FDD does not directly address the applicability of non-disclosure and non-competition agreements to a franchisee's manager, it is important for a prospective franchisee to seek clarification from Crawlspace Medic regarding this matter. Understanding the specific obligations and restrictions placed on employees, including managers, is crucial for managing the franchise effectively and avoiding potential legal issues. A prospective franchisee should inquire about the specific agreements or clauses that would bind a manager after leaving the company and the duration and scope of such restrictions.