During the term of the Crawlspace Medic agreement, can the Developer interfere with the business of the Franchisor or other franchisees?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3 Noncompetition Covenants.
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, the Developer is prohibited from interfering with the business of the Franchisor or other Crawlspace Medic developers or franchisees. Specifically, the Developer cannot divert business or customers to competitors, participate in a similar crawlspace or basement service business, or perform any act that is injurious to the goodwill associated with the Crawlspace Medic brand.
This restriction is part of the non-competition covenants outlined in the agreement, which the Developer acknowledges as fair and reasonable. The FDD states that the Developer has other skills and experience to derive income from other endeavors. If any part of these restrictions is deemed unreasonable, the terms will be reduced in time or scope to ensure enforceability.
Crawlspace Medic also has the right to seek injunctive relief to prevent any conduct by the Developer that violates these non-competition terms, acknowledging that such violations would cause immediate and irreparable harm to Crawlspace Medic. The Developer agrees that any claims they may have against Crawlspace Medic will not serve as a defense against the enforcement of these covenants.
This clause protects Crawlspace Medic's business interests and the interests of its franchisees by preventing a Developer from leveraging the training, trade secrets, and confidential information gained through the agreement to harm the Crawlspace Medic system. This is a standard practice in franchising to maintain brand integrity and protect the network from internal competition.