After termination of employment with a Crawlspace Medic franchisee, what is the geographic radius around the franchisee's territory within which a Covenantor is restricted from participating in a similar crawlspace or basement service business?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, a Covenantor (employee) is restricted from participating in a similar crawlspace or basement service business within a 25-mile radius of the franchisee's territory or any Crawlspace Medic location after termination of employment or association with the franchisee. This restriction lasts for a period of 24 months. This non-compete agreement aims to protect Crawlspace Medic's goodwill and unique qualities of the system by preventing former employees from using confidential information gained during their employment to compete against the franchise.
This restriction applies if the Covenantor attempts to become an owner, partner, director, officer, employee, consultant, or agent in a similar business. The FDD specifies that these covenants are considered reasonable to protect the franchisor's interests, given that the employee has other skills and experiences to derive income from other endeavors.
However, the franchisor retains the right to reduce the scope of the non-compete agreement, including the geographic area, at its discretion. Additionally, if a court finds the geographic scope to be unreasonable, it may be reduced to an enforceable level. This flexibility allows Crawlspace Medic to adjust the restrictions as needed to ensure they are fair and enforceable.