What activities are prohibited under the post-term restriction for Crown Gold Exchange?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Crown Gold Exchange business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Crown Gold Exchange business operating on the date of termination.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Crown Gold Franchising. Franchisee agrees that the existence of any claim it may have against Crown Gold Franchising shall not constitute a defense to the enforcement by Crown Gold Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Crown Gold Exchange Franchise Disclosure Document, both the franchisee and the guarantor are subject to post-term restrictions. For a period of two years after the franchise agreement expires or is terminated, or after a transfer, they are restricted from engaging in certain activities within a five-mile radius of the franchisee's territory or any other Crown Gold Exchange business operating at the time of termination or transfer. If the territory hasn't been determined before termination, the non-competition area will be the Development Area and the territory of any other Crown Gold Exchange business.
The prohibited activities include directly or indirectly having any ownership interest in a competitor. This means a franchisee cannot own any part of a competing business, even a small share. They are also barred from lending money or providing financial assistance to a competitor, preventing them from funding or supporting a competing business.
Furthermore, franchisees cannot provide any services to or be employed by a competitor. This restriction prevents a former franchisee from using their knowledge and experience to benefit a competing business, whether as an employee or in any other service-related capacity. These covenants are independent, and if any part is deemed unenforceable, the parties intend for the arbitrator or court to modify the restriction to protect Crown Gold Exchange's business interests. Non-compliance extends the restrictive period by one day for each day of noncompliance.