What is the stated purpose of the non-compete agreements for Crawlspace Medic Covenantors?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
d likely be injurious or prejudicial to the goodwill associated with the System.
- f. Covenantor agrees that no Confidential Information may be reproduced, in whole or in part, without written consent.
2. Covenants Not to Compete.
- a. In order to protect the goodwill and unique qualities of the System, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants that during Covenantor's employment or association with Franchisee, Covenantor shall not, for Covenantor 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 Crawlspace Medic system 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 substantially similar to the System.
- b. In further consideration for the disclosure to Covenantor of the Confidential Information and to protect the goodwill and unique qualities of the System, Covenantor further agrees and covenants that, upon the termination of Covenantor's employment or association with Franchisee and continuing for twenty-four (24) months thereafter, Covenantor shall not, for Covenantor 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 Crawlspace Medic System to any competitor, by direct or indirect inducement or otherwise,
- (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.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the non-compete agreements for Covenantors are designed to protect the goodwill and unique qualities of the Crawlspace Medic system. These agreements are put in place in exchange for the disclosure of confidential information to the Covenantor. This confidential information includes trade secrets that are essential to the Crawlspace Medic system.
The non-compete agreements ensure that Covenantors do not divert business or customers to competitors, either during their association with the franchisee or for a period of twenty-four months after their employment or association ends. The agreements also prevent Covenantors from participating in any crawlspace or basement service business that is substantially similar to the Crawlspace Medic system. These restrictions apply to the Covenantor acting alone or in conjunction with any other person or entity.
The agreements also state that Covenantors cannot perform any action that would be harmful to the goodwill associated with the Crawlspace Medic system. Covenantors must also surrender any materials containing confidential information upon request or termination of their employment. These measures are in place to maintain the integrity and competitive advantage of the Crawlspace Medic franchise system.
Crawlspace Medic emphasizes that these covenants are considered reasonable in terms of time, geographical area, and scope of activity, ensuring they do not impose undue hardship on the Covenantor. The franchisor also retains the right to reduce the scope of any covenant, providing flexibility in enforcement. Franchisees are responsible for ensuring that their Covenantors comply with these agreements, and any breach could result in irreparable injury to Crawlspace Medic, potentially leading to legal action.