Where in the Exit FDD can I find information about covenants not to compete?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
confidence, shall not use or disclose such Confidential Information (except in the performance of this Agreement), shall diligently protect any and all Confidential Information against loss by inadvertent or unauthorized disclosure, and shall comply with guidelines established by EXIT and Subfranchisor for the purpose of protecting the information.
21. FRANCHISEE'S COVENANTS NOT TO COMPETE
21.1. In-Term Covenant Not to Compete
Franchisee and Franchisee's shareholders, partners, members, directors, officers and guarantors of this Agreement will not, during the term of this Agreement and all renewals and extensions of this Agreement, on their own account or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any real estate business, or
other related business that is in any way competitive with or similar to the business conducted by EXIT or EXIT subfranchises or franchises, nor offer products or services that are offered by EXIT.
21.2. Post-Term Covenants
Franchisee and Franchisee's shareholders, partners, members, directors, officers and guarantors of this Agreement will not, for a period of one (1) year following the termination, assignment or expiration of this Agreement on their own account or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, limited liability company, partnership or corporation, directly or indirectly,
- (a) within a ten (10) mile radius of Franchisee's office, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any real estate brokerage business, which business utilizes at any location a reward system for "sponsoring" sales representatives at any of its locations, or in any other way operates substantially similar manner to the EXIT System; or
- (b) within a ten (10) mile radius of Franchise's office own, operate, lease, franchise, conduct or engage in, be connected with, have any interest in or assist any person or entity engaged in any real estate brokerage business, provided the foregoing shall not apply if this Agreement expired at the end of its term.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 27)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, information regarding covenants not to compete can be found in Section 21, titled "FRANCHISEE'S COVENANTS NOT TO COMPETE." This section outlines the restrictions placed on franchisees both during the term of the agreement and after its termination.
Specifically, Section 21.1 details the "In-Term Covenant Not to Compete," which prevents franchisees (and their related parties) from engaging in any real estate business or related activities that compete with Exit during the term of the agreement, including renewals and extensions. Section 21.2 outlines the "Post-Term Covenants," which restrict franchisees (and their related parties) from engaging in competitive activities for a period of one year following the termination, assignment, or expiration of the agreement.
The FDD also emphasizes the reasonableness and necessity of these covenants in Section 21.3, stating that the limitations are in place to protect Exit and its other franchises. Section 21.4 discusses injunctive relief, highlighting that Exit can seek court orders to enforce these covenants to protect its business interests, proprietary marks, and confidential information. This section also states that violations of these covenants will cause irreparable injury to the Exit system.