Can a court modify the restrictive covenants in the Dryject franchise agreement?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) It is the express intention of the parties to this Agreement to comply with all laws applicable to the covenants contained in this Agreement.
If any of the covenants contained in this Section are found to exceed in duration, geography or scope those permitted by applicable law, the parties expressly agree that such restrictive covenant may be reformed or modified by the final judgment of a court of competent jurisdiction or other lawful constituted authority to reflect a lawful and enforceable restriction, whether in duration, geography or scope, and that the covenants contained in this Section shall automatically be deemed to be amended and modified so as to comply with the judgment or order of such court or authority to the maximum extent permitted.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 Dryject FDD, the franchise agreement contains a provision that allows a court to modify restrictive covenants if they are deemed too broad under applicable law. Specifically, if any covenant regarding duration, geography, or scope is found to exceed legal limits, the parties agree that a court can reform or modify the covenant to make it lawful and enforceable. The agreement will then be automatically amended to comply with the court's judgment to the maximum extent permitted.
This clause is included to ensure that the non-compete and other restrictive covenants in the Dryject franchise agreement are as enforceable as possible. Non-compete agreements are often scrutinized by courts, and their enforceability can vary significantly depending on state law. By including this modification provision, Dryject aims to avoid a situation where an overly broad covenant is struck down entirely, potentially leaving the franchisor with no protection at all.
For a prospective Dryject franchisee, this means that the specific terms of the non-compete (such as the geographic radius and duration) could be subject to change if challenged in court. The franchisee should be aware of the laws in their specific state regarding non-compete agreements and understand that a court could potentially narrow the scope of the restrictions. This clause provides some reassurance that the restrictions will be interpreted in a way that is legally sound, but it also introduces some uncertainty about the exact terms that will ultimately be enforced.
It's also important to note that Dryject includes specific state riders to the franchise agreement, as seen in the California rider. These riders may further modify the terms of the agreement to comply with local laws, including those related to non-compete agreements. Franchisees should carefully review any state-specific riders that apply to their franchise location to fully understand their rights and obligations.