Is the covenant not to compete in the Deer Solution Franchise Agreement, which extends beyond termination, always enforceable under California law?

According to Deer Solution's 2025 Franchise Disclosure Document, the enforceability of the covenant not to compete, which extends beyond the termination of the franchise, is not guaranteed under California law. Specifically, the California FDD Amendment supplements Item 17, "Renewal, Termination, Transfer and Dispute Resolution: The Franchise Relationship," by stating that this provision "may not be enforceable under California law." This means that a California court might not uphold the non-compete agreement if a dispute arises.

This disclosure is crucial for prospective Deer Solution franchisees in California because it highlights a potential legal challenge to a standard clause in many franchise agreements. Non-compete agreements are designed to prevent franchisees from opening a competing business or working for a competitor during and after the franchise term, within a specific geographic area. However, California law is generally less favorable towards these types of restrictions, aiming to promote competition and employee mobility.

Given this uncertainty, Deer Solution encourages prospective franchisees to seek independent legal counsel to fully understand the implications of the non-compete clause in California. This includes assessing the specific terms of the covenant, the potential scope of its restrictions, and the likelihood of its enforcement in a California court. Understanding these factors is essential for making an informed decision about investing in a Deer Solution franchise in California and for planning future business activities after the franchise term.