Is an Exit franchisee prohibited from performing any act injurious to the goodwill associated with the Exit System after termination?

According to Exit's 2025 Franchise Disclosure Document, a franchisee is prohibited from performing any act injurious or prejudicial to the goodwill associated with the Exit System. This restriction applies both during the term of the franchise agreement and after its expiration or termination. This is designed to protect the brand's reputation and the interests of other franchisees within the Exit system.

This provision means that after leaving the Exit franchise system, a former franchisee cannot take actions that could harm the brand's image or customer relationships. Examples of prohibited actions could include making disparaging remarks about Exit, attempting to divert business away from other Exit franchisees, or engaging in activities that undermine the Exit System's standards and reputation. The franchise agreement specifically states that the covenants within this section are considered reasonable and necessary to protect Exit and its franchisees.

Exit can seek injunctive relief to enforce these post-termination obligations. This means Exit can pursue court orders to prevent a former franchisee from engaging in activities that violate the agreement, including those that could damage the goodwill of the Exit brand. The franchisee also agrees to cover Exit's costs associated with such legal proceedings, including attorney's fees and investigation costs. This underscores the importance of adhering to the terms of the franchise agreement, even after the franchise relationship ends, to avoid potential legal and financial repercussions.

These types of clauses are common in franchise agreements to protect the brand and the network of franchisees. Prospective Exit franchisees should carefully review all post-termination obligations to fully understand the restrictions and responsibilities they will have even after their franchise agreement concludes.