What is the Dryject franchisee's obligation regarding restrictive covenants upon termination or expiration?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ix) Abide by all restrictive covenants set forth in Sections 25 through 27 of this Agreement;
- (x) Assign any and all accounts receivable to Us for collection. In connection therewith You hereby appoint Us as attorney-in-fact to engage in such collection activities following the termination or expiration of this Agreement and You specifically undertake to refrain from engaging in any such collection activities upon termination or expiration. We agree to employ good faith efforts, including, where appropriate in Our sole and exclusive judgment, the commencement of legal proceedings, to collect such accounts receivable. Nothing contained herein shall be construed or deemed to impose any duty or obligation upon Us to collect such accounts receivable and, if all or a portion of such accounts receivable are not collected by Us, You release and waive any claims thereto against Us. If We are successful in collecting all or a part of such accounts receivable, We shall remit to You such sums collected after first deducting any and all monies owed to Us; after deducting the pro rata cost of servicing the customer(s) with respect to whom the receivables were collected; and, after further deducting Our costs of collection; and,
- (xi) Immediately refrain from engaging in any and all contacts with customers or former customers of the Franchised Business, whether with respect to collection of accounts receivable, to provide services to such customers or former customers pursuant to any business conducted by You, whether or not similar to the Franchised Business, or for any other purpose whatsoever.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 Dryject Franchise Disclosure Document, franchisees are subject to restrictive covenants both during the term of the agreement and after its termination or expiration. Specifically, franchisees must adhere to sections 25 through 27 of the agreement, which likely contain details about non-compete and confidentiality obligations.
Upon termination or expiration of the Dryject Franchise Agreement, franchisees must also assign any and all accounts receivable to Dryject for collection. In connection with this, the franchisee appoints Dryject as their attorney-in-fact to engage in collection activities and must refrain from any collection activities themselves. Dryject agrees to employ good faith efforts to collect these accounts, including legal proceedings if deemed appropriate. However, Dryject is not obligated to collect the receivables, and the franchisee releases any claims against Dryject if the receivables are not collected.
Furthermore, franchisees must immediately cease all contact with customers or former customers of the franchised business. This restriction applies whether the contact relates to collecting accounts receivable, providing services, or any other purpose, regardless of whether the franchisee is operating a similar business. These measures are designed to protect Dryject's customer relationships and goodwill after a franchise agreement ends.
It's important to note that if the Dryject franchise is located in Wisconsin, certain provisions regarding termination and repurchase of inventory may be superseded by the Wisconsin Fair Dealership Law, which provides specific rights to franchisees, including notice and remedy periods. Additionally, Dryject reserves the right to challenge the constitutionality of any state law that declares void or unenforceable any provision in the franchise agreement.