What section of the Exit Franchise Agreement covers the franchisee's covenants not to compete?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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,
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Section 21 of the Franchise Agreement outlines the franchisee's covenants not to compete. This section is titled "FRANCHISEE'S COVENANTS NOT TO COMPETE." It details the restrictions placed on the franchisee both during the term of the agreement and after its termination, expiration, or non-renewal.
Specifically, Section 21.1 addresses the "In-Term Covenant Not to Compete," which prevents the franchisee and related parties from engaging in any real estate business or related activities that compete with Exit during the agreement's term. Section 21.2 outlines the "Post-Term Covenants," which restrict the franchisee from engaging in similar competitive activities for one year after the agreement ends within a specified radius of the franchisee's office.
These covenants are designed to protect Exit's business interests, trade secrets, and goodwill. The FDD also notes that the parties agree that these covenants are reasonable and necessary to protect Exit and its other franchises. It is important for a prospective franchisee to carefully review Section 21 to understand the full scope of these restrictions and their potential impact on their future business activities.