Under what circumstances can a Crawlspace Medic developer engage in activities otherwise prohibited by the non-competition covenants?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
mation 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
serve in any other capacity in any crawlspace or basement service business within twenty-five (25) miles of the Territory or any Crawlspace Medic location; 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.
- 8.4 Reasonableness of Restrictions. Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, a developer is bound by non-competition covenants, restricting their involvement in similar businesses during the agreement term and for a period afterward. However, there are specific circumstances under which these restrictions can be waived.
Specifically, a Crawlspace Medic developer can engage in activities otherwise prohibited by the non-competition covenants if the franchisor provides written approval. This indicates that the franchisor has the discretion to allow a developer to participate in activities that would normally be considered a breach of the agreement. This could be due to various reasons, such as the franchisor determining that the activity does not pose a significant competitive threat or if it aligns with the franchisor's strategic interests.
Additionally, the franchisor has the right to reduce the scope of any covenant set forth in the agreement, without the developer's consent. This modification becomes effective immediately upon the developer receiving written notice. This provision grants Crawlspace Medic flexibility to adjust the non-compete restrictions based on changing market conditions or individual circumstances, ensuring that the restrictions remain reasonable and enforceable. If a court finds the non-compete unreasonable, the terms will be adjusted to be reasonable.