After the Dq Treat franchise is terminated or expires, what are the geographic limits of the non-competition covenant for a Captive-venue location?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise agreement | Summary |
|---|---|---|
| r. Non-competition covenants after the franchise is terminated or expires | Section 14.6 | No direct or indirect involvement in a Competitive Business within: 500 meters of the authorized location for one year after termination or expiration for Street location; or within same building or venue for Captive- venue location. |
Source: Item 16 — UItem 16U***:** U**Restrictions on What the Franchisee May Sell (FDD pages 51–55)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. For a Captive-venue location, the geographic limit of this covenant is within the same building or venue. This restriction lasts for one year after the termination or expiration of the Dq Treat franchise agreement.
This means that if a franchisee operates a Dq Treat location within a specific venue like a mall, airport, or stadium, they cannot be directly or indirectly involved in a Competitive Business within that same venue for one year after their franchise agreement ends. A Competitive Business is defined as any quick service restaurant that serves hamburgers but does not serve alcohol, or a business that generates more than 10% of its revenue from sales of ice cream, yogurt, frozen custard, fruit-based beverages, soft-serve or other frozen treats.
The non-compete terms vary based on the location type. For a Street location, the non-competition covenant extends to 500 meters from the authorized location. The restriction for Captive-venue locations is more limited geographically, applying only within the same building or venue. This difference likely reflects the unique customer base and competitive dynamics of each location type.
Prospective franchisees should carefully consider these post-termination restrictions, especially if they envision remaining in the food service industry after their Dq Treat franchise agreement concludes. Understanding the scope and duration of the non-competition covenant is essential for planning future business ventures and avoiding potential legal conflicts with Dq Treat.