Does the in-term covenant not to compete for an Exit franchise extend to renewals and extensions of the franchise agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the in-term covenant not to compete extends through all renewals and extensions of the franchise agreement. This means that during the initial term of the agreement, as well as any subsequent renewal or extension terms, the franchisee and related parties are restricted from engaging in any real estate business or related activities that compete with Exit. This restriction applies to the franchisee, their shareholders, partners, members, directors, officers, and guarantors.
Specifically, the franchisee is prohibited from owning, operating, leasing, franchising, or being connected with any real estate business that is competitive with Exit. This includes being an employee, agent, consultant, partner, officer, director, or shareholder of any entity engaged in such a business. The covenant also prevents franchisees from offering products or services that are offered by Exit during the term of the agreement and any renewals or extensions.
This covenant is a significant restriction for potential Exit franchisees, as it limits their ability to participate in any competitive real estate ventures during the entire term of their franchise agreement and any subsequent renewals or extensions. Franchisees need to fully understand the scope of this restriction and its potential impact on their other business interests or future opportunities. Violation of this covenant can lead to termination of the franchise agreement, as detailed in Section 16.1(A)(viii).