factual

After a transfer of a Crown Gold Exchange franchise, how long does the post-term non-compete restriction last?

Crown_Gold_Exchange Franchise · 2024 FDD

Answer 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, the post-term non-compete restriction lasts for two years after a transfer. This means that after a franchisee transfers their Crown Gold Exchange franchise to another party, they are restricted from engaging in competitive activities for a period of two years.

Specifically, the franchisee (or a restricted party) cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any competitor. This restriction applies within five miles of the franchisee's territory or the territory of any other Crown Gold Exchange business operating on the date of the transfer.

It is important to note that if the Franchise Agreement is terminated before the territory is determined, the area of non-competition will be the Development Area and the territory of any other Crown Gold Exchange business operating on the date of termination. Additionally, if the franchisee fails to comply with the non-compete obligations during the restrictive period, the period will be extended by one day for each day of noncompliance, which could further prolong the restriction.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.