Is a Devon Creek franchisee required to comply with non-competition covenants after termination?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee and each Principal covenant that, except as otherwise approved in writing by Franchisor:
- 19.5.1 During the term of this Agreement, Franchisee and each Principal shall not, either directly or indirectly, for themselves or through, on behalf of, or in conjunction with, any person or entity (i) divert, or attempt to divert, any business, customer or referral source of the Franchised Business or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any residential or commercial lawncare or servicing business similar to the System; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any
manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Devon Creek franchisees or Franchisor-affiliated outlets.
19.5.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Franchisee and Principals shall not, either directly or indirectly, for themselves or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business, customer or referral source of the Franchised Business, Franchisor or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any residential or commercial lawncare business within twenty-five (25) miles of the Territory or within fifty (50) miles of any Devon Creek office location; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Devon Creek franchisees.
19.6 Reasonableness of Restrictions.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, franchisees and their principals are subject to non-competition covenants both during the term of the agreement and for a period of time after the agreement expires or is terminated. Specifically, for twenty-four months after the agreement ends, the franchisee and principals are prohibited from engaging in activities that could harm Devon Creek's business.
These restrictions include not diverting business, customers, or referral sources to competitors, and not participating as an owner, partner, director, officer, employee, consultant, or agent in any residential or commercial lawncare business. This non-compete extends to within twenty-five miles of the franchisee's territory or within fifty miles of any Devon Creek office location. These restrictions are designed to protect Devon Creek's goodwill, trademarks, and overall business interests.
The FDD states that these covenants are considered reasonable in terms of time, geographical area, and scope. However, if any court finds the restrictions to be unreasonable, the terms will be adjusted to be enforceable. This ensures that the non-compete is only as restrictive as necessary to protect Devon Creek's legitimate business interests, which is a fairly standard practice in franchising to prevent franchisees from using the franchisor's knowledge and brand recognition to unfairly compete after the franchise relationship ends.