If a Dryject franchisee breaches the non-compete covenants, what fee must they pay to Dryject for each Competitive Business?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
(j) In addition to any other remedies or damages allowed under this Agreement and/or by law, if You breach any of the covenants set forth in Subsections 25(a) and (b), You shall pay Us a fee equal to Our then-current Initial Franchise Fee for each Competitive Business identified plus eight percent (8%) of such Competitive Business' Gross Revenues until expiration of the noncompetition period set forth in this Section.
(k) During the Term of this Agreement, any of Our officers or area supervisors shall have the right to inspect any business interest in which You or a Key Employee has an interest, at reasonable times and during normal business hours, to the extent reasonably necessary to determine whether the conditions of this Section are being satisfied.
If, by reason of such inspections or otherwise, We have reason to believe that You are in default of this Section 25, and You are so notified by Us, You shall have the burden of establishing that You are not in default.
You shall respond to any default notice under this Section within five (5) days.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, if a franchisee breaches the non-compete covenants outlined in Subsections 25(a) and (b) of the agreement, they must pay Dryject a fee for each Competitive Business. This fee is equivalent to Dryject's then-current Initial Franchise Fee, plus an additional eight percent (8%) of the Competitive Business's Gross Revenues. This payment obligation continues until the expiration of the non-competition period specified in the agreement.
This clause is designed to protect Dryject's market position and discourage franchisees from engaging in competitive activities that could undermine the brand. The financial implications of breaching the non-compete agreement are substantial, as the franchisee would be responsible for paying both a lump sum equal to the initial franchise fee and a percentage of the competing business's ongoing revenue.
For a prospective Dryject franchisee, this highlights the importance of understanding and adhering to the non-compete terms. It also underscores the need to carefully consider the potential financial consequences of violating these terms. The franchisee should seek legal counsel to fully understand the scope and enforceability of the non-compete provisions in their specific jurisdiction.
Dryject also has the right to inspect any business interest in which the franchisee or a Key Employee has an interest, at reasonable times and during normal business hours, to determine whether the conditions of Section 25 are being satisfied. If Dryject believes that the franchisee is in default of Section 25, the franchisee has the burden of establishing that they are not in default and must respond to any default notice within five (5) days.