After the Exit franchise agreement terminates, am I allowed to induce sales representatives of other Exit franchisees to stop working for them?

According to Exit's 2025 Franchise Disclosure Document, after the termination or expiration of the franchise agreement, a franchisee is prohibited from soliciting or inducing any sales representative of another Exit franchisee to stop working for that franchisee. This restriction applies to individuals who are retained as sales representatives at the time of the termination or expiration of the agreement. The term "sales representative" is specifically defined in the Exit Formula attached to the Franchise Agreement, which Exit can amend at its discretion.

This restriction is designed to protect the relationships between Exit franchisees and their sales representatives, preventing former franchisees from disrupting the network by poaching talent. This clause remains in effect regardless of whether the franchise agreement expires naturally or is terminated for any reason. The FDD emphasizes that this covenant is considered reasonable and necessary to protect Exit and its other franchisees.

In practical terms, this means that if you leave the Exit franchise system, you cannot actively recruit sales representatives from other Exit offices to join your new business. Doing so would be a breach of the franchise agreement and could lead to legal repercussions. However, the franchise agreement also states that Exit affiliates are allowed to solicit a franchisee's sales representatives for transfer to other operating Exit offices both during the ten-day period prior to termination or non-renewal of the agreement, immediately upon the termination or non-renewal becoming effective and continuing thereafter. The franchisee is required to assist in these transfers, which seems to contradict the restrictions placed on the franchisee after termination.

Prospective franchisees should carefully consider this restriction and how it might impact their future business plans if they decide to leave the Exit system. It would be prudent to seek clarification from Exit regarding the specific definition of "solicit or induce" and how strictly this provision is enforced in practice. Understanding these limitations is crucial for making an informed decision about investing in an Exit franchise.