Are there non-competition covenants after the Engineering For Kids franchise is terminated or expires?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary * | |
|---|---|---|---|
| Franchise or other Agreement | |||
| c Requirements for you to renew or extend | 2.2 | Notice, satisfaction of monetary obligations, compliance with Franchise Agreement, not in material default, release, sign then-current form of Franchise Agreement (which may contain materially different terms and conditions than the original agreement), pay a renewal fee, and others; please refer to §§ 2.2.1 –2.2.7 in the Franchise Agreement. | |
| d Termination by you | Not applicable | Subject to state law, you may not terminate the Franchise Agreement. | |
| e Termination by us | Not applicable | ||
| without cause | |||
| f Termination by us with cause | 15 | Default under agreement, bankruptcy, abandonment, and other grounds; see § 15 of the Franchise Agreement. (Under the U.S. Bankruptcy Code, 11 U.S.C. § 101, et seq., we may be unable to terminate the agreement merely because you make a bankruptcy filing.) | |
| g “Cause” defined – | 15.3 | All other defaults not specified in §§ 15.1 and | |
| curable defaults | 15.2 of the Franchise Agreement | ||
| h “Cause” defined – non-curable defaults | 15.1 and 15.2 | Bankruptcy, abandonment, conviction of felony, and others (but under the U.S. Bankruptcy Code, 11 U.S.C. § 101, et seq., we may be unable to terminate the agreement merely because you make a bankruptcy filing). | |
| i Your obligations on termination/ nonrenewal | 16 | Immediately stop operating the Franchised Business, stop all use of our trademarks, pay all amounts due, pay liquidated damages if termination was due to your default, and others; see §§ 16.1.1 – 16.1.4 of the Franchise Agreement. | |
| j Assignment of | 13 | There are no limits on our right to assign the | |
| contract by us | Franchise Agreement. | ||
| k “Transfer” by you – | 14.1 | Includes transfer of any interest. | |
| defined | |||
| l Our approval of | 14.2 | We have the right to approve transfers. | |
| transfer by you | |||
| m Conditions for our approval of transfer | 14.3 | Release, signature of new agreement, payment of transfer fee, meet then-current qualifications to our satisfaction, successfully complete training requirements and pay training fee, arrange to upgrade and conform Franchised | |
| Provision | Section in Franchise or other Agreement | Summary * Business to then-current standards and specifications, sign our then-current form of personal guarantee; transferee must not be in default, and prices and other proposed terms of transfer must not have effect of negatively impacting future viability of Franchised Business. | |
| n Our right of first | 14.9 | We can match any offer. | |
| refusal to acquire | |||
| your business | |||
| o Our option to | Not applicable | ||
| purchase your | |||
| business | |||
| p Your death or disability | 14.7 | If you die or become incapacitated, your executor or representative must apply to us in writing for approval within three months after death or the onset of disability. | |
| q Non–competition covenants during the term of the franchise | 17.1 | Includes prohibition on engaging in a competitive business and diverting business from your Franchised Business. | |
| r Non–competition covenants after the franchise is terminated or expires | 17.2 | Includes a two year prohibition similar to “q” (above), within the Territory, within five miles in any direction of the outside borders of the Territory, and within any other territory in which an Engineering For Kids Business operates at the time of expiration, termination, or transfer. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 45–48)
What This Means (2025 FDD)
According to Engineering For Kids's 2025 Franchise Disclosure Document, franchisees are subject to non-competition covenants both during the term of the franchise and after it is terminated or expires. Specifically, after the franchise ends, the franchisee is prohibited from engaging in a similar competitive business for two years.
The geographic scope of this post-term non-compete includes three areas. First, it applies within the originally assigned territory. Second, it extends to a five-mile radius from the outside borders of that territory. Finally, the non-compete covers any other territory where an Engineering For Kids business operates at the time of the franchise's expiration, termination, or transfer.
This means that upon termination or expiration of the Engineering For Kids franchise agreement, a former franchisee would be restricted from operating a similar business within their original territory, a five-mile buffer zone around it, and any other location where Engineering For Kids has a business. Prospective franchisees should carefully consider the implications of these restrictions, especially if they plan to remain in the same geographic area and continue in a similar line of work after leaving the Engineering For Kids system. It is important to fully understand the extent of these limitations and how they might impact future business opportunities.