Are there non-competition covenants during the term of the Engineering For Kids franchise?
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. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 45–48)
What This Means (2025 FDD)
According to the 2025 Engineering For Kids Franchise Disclosure Document, franchisees are subject to non-competition covenants during the term of the franchise agreement. Specifically, this includes a prohibition on engaging in any competitive business and diverting business away from their Engineering For Kids franchise. This means that while operating an Engineering For Kids franchise, franchisees cannot own or operate a similar business or take actions that would negatively impact the Engineering For Kids business.
These types of non-compete clauses are common in franchise agreements to protect the franchisor's brand and market share. Engineering For Kids aims to prevent franchisees from using the franchisor's proprietary information and systems to benefit a competing business during the franchise term. This restriction helps maintain the integrity of the Engineering For Kids brand and ensures that franchisees are fully committed to the success of their franchised business.
Prospective franchisees should carefully review Section 17.1 of the Franchise Agreement, as referenced in the table, to fully understand the scope and limitations of these non-competition covenants. Understanding these restrictions is crucial for franchisees to avoid any potential breaches of the agreement and to plan their business activities accordingly. Franchisees should also seek legal counsel to fully understand the implications of these covenants in their specific circumstances.