For Deer Solution, what is the impact on non-competition covenants if a transfer occurs in violation of the Franchise Agreement terms?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
Transfer in violation of the terms and conditions of the Franchise Agreement;
- (c) if you are an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of the Franchise Agreement to a third party and/or should Franchisee, fail to obtain our consent to the proposed Transfer of the Franchise Agreement to a third party (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms and conditions of the Franchise Agreement; and
- (d) if you are the Spouse of an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of the Franchise Agreement to a third party and/or should Franchisee, fail to obtain our consent to the proposed Transfer of the Franchise Agreement to a third party (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms and conditions of the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer their franchise agreement without properly notifying Deer Solution or obtaining their consent, the owner and the spouse of the owner remain subject to the non-competition covenants outlined in Article 4 of the agreement. This applies regardless of whether the transfer is completed or not.
This means that even if a Deer Solution franchisee sells their business to a third party without following the correct procedures, the original owner and their spouse are still bound by the non-compete agreement. They cannot engage in any competitive business activities as defined in the franchise agreement. This provision protects Deer Solution from unfair competition by former franchisees who might try to circumvent the non-compete rules through an unapproved transfer.
For a prospective Deer Solution franchisee, this highlights the importance of adhering to the proper transfer procedures outlined in the franchise agreement. Failure to do so could result in the original owner and their spouse being restricted from working in a competing business, even after they have sold their franchise. This could significantly impact their future career options and financial opportunities. Franchisees should carefully review Article 4 of the Franchise Agreement to fully understand the scope and duration of these non-competition covenants.