After a transfer of the Desi District franchise, how long does the post-term restriction last?

According to the 2024 Desi District Franchise Disclosure Document, if a transfer of the franchise occurs, a post-term restriction applies. This restriction lasts for two years after the transfer. During this two-year period, neither the franchisee, any owner, nor any spouse of an owner (referred to as "Restricted Parties") can have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by any competitor.

This non-compete clause is limited geographically. The restriction applies only within five miles of the franchisee's territory or the territory of any other Desi District business operating on the date of the transfer. This means that after transferring a Desi District franchise, the restricted parties are prevented from engaging with a competing business within a limited radius of existing Desi District locations.

The restriction is triggered by the transfer itself, meaning that the two-year clock starts ticking from the date of the transfer. This is distinct from the expiration or termination of the franchise agreement, which also triggers a similar two-year restriction. The clause aims to protect Desi District's market share and proprietary information by preventing former franchisees from immediately leveraging their knowledge to benefit a competing business in the same area.