When does the non-competition covenant begin for a Creative World School franchise transfer?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
- (i) you and your transferring owners have executed a non-competition covenant in favor of us and the transferee agreeing to be bound, commencing on the effective date of the transfer; and
(j) you and your transferring owners have agreed that you and they will not directly or indirectly at any time or in any manner (except with respect to other Schools you own and operate) identify yourself or themselves or any business as a current or former School, or as one of our licensees or franchisees, use any Mark, any colorable imitation of a Mark, or other indicia of a School in any manner or for any purpose or utilize for any purpose any trade name, trade or service mark or other commercial symbol that suggests or indicates a connection or association with us.
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to the 2025 Creative World School Franchise Disclosure Document, if a franchisee transfers their franchise, the non-competition covenant they must execute begins on the effective date of the transfer. This means that from the moment the transfer is officially completed, the franchisee is bound by the terms of the non-competition agreement.
This covenant is made in favor of both Creative World School and the new transferee. The transferring franchisee agrees not to identify themselves or any business as a current or former Creative World School, licensee, or franchisee. They also cannot use any Creative World School marks or anything that imitates those marks.
This restriction applies at any time and in any manner, preventing the seller from leveraging their past association with Creative World School to compete with the new franchisee. The only exception to this is if the transferring franchisee owns and operates other Creative World Schools. This ensures that the brand's reputation and the new franchisee's business are protected from direct competition by the previous owner.