During the term of the Exit franchise agreement, are the franchisee's shareholders prohibited from owning an interest in any real estate business?
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, both the franchisee and their shareholders are restricted from engaging in any competitive real estate business during the term of the franchise agreement. Specifically, they cannot own, operate, or have any interest in any real estate business that competes with Exit. This restriction applies to the franchisee, their shareholders, partners, members, directors, officers, and guarantors.
This in-term covenant not to compete ensures that franchisees and related parties remain fully committed to the Exit franchise and do not divert resources or expertise to competing ventures. This is a fairly standard practice in franchising, as franchisors want to protect their brand and market share.
After the termination, assignment, or expiration of the Exit franchise agreement, the franchisee and their shareholders are still subject to certain restrictions for a period of one year. These post-term covenants prevent them from engaging in activities that could harm the Exit system, such as operating a competing business within a specific radius or soliciting Exit's employees or franchisees. These measures are designed to protect Exit's goodwill and prevent unfair competition from former franchisees.