Does the non-compete agreement for Endless Summer Sweets apply to the spouse of an owner after a transfer?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
the termination or expiration of this Agreement indefinitely.
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties or "Restricted Party") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason or, where applicable, for two years after a Transfer, no Restricted Party shall directly or indirectly operate, have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor which is located at the premises upon which the Endless Summer Sweets is or was located or is located or within a twenty-five (25) mile radius of the Franchisee's location or any other Endless Summer Sweets location, whether owned by Franchisor or another Franchisee. Franchisee expressly agrees that the two-year period and the twentyfive (25) mile radius are the reasonable and necessary time and distance needed to protect Franchisor if this Agreement expires or is terminated for any reason.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, the non-compete agreement does apply to the spouse of an owner after a transfer. The agreement specifies that after a transfer, "Restricted Parties" are subject to certain restrictions. The term "Restricted Parties" is defined to include the franchisee, any owner, and any spouse of an owner.
Specifically, for two years after a transfer, no Restricted Party can operate, have ownership in, lend money to, provide services to, or be employed by a competitor. This restriction applies to competitors located at the Endless Summer Sweets premises or within a 25-mile radius of the franchisee's location or any other Endless Summer Sweets location.
This non-compete obligation for a spouse continues for two years after a transfer. This means that if a franchisee transfers ownership, the spouse of the previous owner is still restricted from engaging with a competing business within the specified area for the two-year period. Prospective franchisees should carefully consider these restrictions and how they might impact their family members if they decide to sell or transfer their Endless Summer Sweets franchise.