During the term of the Crawlspace Medic agreement, can a franchisee divert business from other franchisees in the system?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee and each Principal, if any, covenant that, except as otherwise approved in writing by Franchisor:
- 19.5.1.
During the term of this Agreement, Franchisee and each Principal, 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; (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) 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 or Franchisor-affiliated outlets.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, franchisees are prohibited from diverting business away from other franchisees within the Crawlspace Medic system during the term of their agreement. Specifically, franchisees cannot directly or indirectly attempt to take business or customers from other franchisees to benefit a competitor. This restriction is in place to protect the integrity of the Crawlspace Medic network and ensure fair practices among franchisees.
This provision is reinforced by the agreement that franchisees must not participate in any crawlspace or basement service business similar to the Crawlspace Medic system as an owner, partner, director, officer, employee, consultant, or agent. This non-compete clause extends to actions that could harm the goodwill associated with the Crawlspace Medic brand or disrupt the business of other franchisees or Franchisor-affiliated outlets. The agreement emphasizes that any violation would cause irreparable injury to Crawlspace Medic, justifying legal remedies.
The Crawlspace Medic agreement also addresses the reasonableness of these restrictions, stating that they are fair and do not impose undue hardship on the franchisee. This is because franchisees are acknowledged to possess other skills and experiences that allow them to pursue income from other ventures. However, if any restriction regarding time or geographic scope is deemed unreasonable, adjustments will be made to ensure enforceability.
Prospective Crawlspace Medic franchisees should understand that these restrictions are designed to maintain a cohesive and cooperative franchise system. While the restrictions may limit certain business activities, they also protect franchisees from unfair competition within the Crawlspace Medic network. Franchisees should carefully review these clauses and seek clarification from Crawlspace Medic regarding any concerns about their scope or impact on their business operations.