During the term of the Crawlspace Medic agreement, can the Developer divert business from other franchisees to a competitor?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
Developer acknowledges that, pursuant to this Agreement, Developer will receive valuable training, trade secrets and Confidential Information of the System that are beyond the present knowledge, training and experience of Developer.
Developer acknowledges that such specialized training, trade secrets and Confidential Information provide a competitive advantage and will be valuable to him or her in the development and operation of Crawlspace Medic outlets, and that gaining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Developer is entering into this Agreement.
In consideration for such specialized training, trade secrets, Confidential Information and rights, Developer covenants that, except as otherwise approved in writing by Franchisor:
8.3.1 During the term of this Agreement, Developer shall not, either directly or indirectly, for himself or herself 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 Developer's Crawlspace Medic outlets or of other developers or 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) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Crawlspace Medic developers or franchisees or Franchisoraffiliated outlets.
8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of Developer's Crawlspace Medic outlets 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
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, during the term of the agreement, a Developer is prohibited from diverting business or customers from their Crawlspace Medic outlets, or from other developers or franchisees within the Crawlspace Medic system, to any competitor. This restriction includes any direct or indirect inducement.
This non-compete obligation is part of the consideration for the specialized training, trade secrets, and confidential information that Crawlspace Medic provides to the Developer. The FDD states that access to this information gives the Developer a competitive advantage and is a primary reason for entering into the agreement.
Crawlspace Medic also states that violating these non-compete terms would cause immediate and irreparable harm to the company, for which there may not be an adequate legal remedy. As a result, the Developer consents to a court injunction to prevent any actions that violate the non-compete agreement. The Developer also agrees that any claims they may have against Crawlspace Medic will not be a valid defense against the enforcement of these non-compete clauses.