What non-competition covenants are Floors To Go franchisees subject to during the term of the franchise?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Membership Agreement | Summary | |
|---|---|---|---|
| Fee or any applicable Early Termination Fee. | |||
| j. | Assignment of contract by franchisor | Section 10 | Notice |
| k. | "Transfer" by franchisee—defined | Sections 11.1, 11.2, 11.3 and 11.4 | Includes transfer of interest in Membership Agreement and in member if a business entity, upon death/disability, and change in business form |
| l. | Franchisor approval of transfer by franchisee | Section 11.1 | We have right to approve/disapprove transfer. |
| m. | Conditions for f ranchisor approval of transfer | Section 11.1 | Includes payment of monies owed and fee; no breach; release of liability; transferee suitability; and execution of new agreement |
| n. | Franchisor's right of f irst refusal to acquire franchisee's business | Not applicable | |
| o. | Franchisor's option to p urchase franchisee's business | Not applicable | |
| p. | Death or disability of franchisee | Section 11.2 | Includes payment of money owed, transferee suitability, assumption of current agreement, release from estate |
| q. | Non-competition c ovenants during the term of the franchise | Subsection 9.2(d) and Section 9.4 | No participation in other marketing and merchandising systems, subject to applicable state law |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 33–36)
What This Means (2025 FDD)
According to Floors To Go's 2025 Franchise Disclosure Document, franchisees are subject to non-competition covenants during the term of the franchise. Specifically, franchisees are prohibited from participating in other marketing and merchandising systems. This restriction is detailed in Subsection 9.2(d) and Section 9.4 of the Membership Agreement and is subject to applicable state law.
This means that while operating a Floors To Go franchise, a franchisee cannot be involved in any competing marketing or merchandising systems. This is a fairly standard restriction in franchising, designed to protect the brand and prevent franchisees from diverting resources or expertise to other ventures. The FDD indicates that the specifics of this covenant are subject to state law, meaning the enforceability and scope of the restriction can vary depending on where the franchise is located.
Prospective franchisees should carefully review Subsection 9.2(d) and Section 9.4 of the Membership Agreement, as well as consult with legal counsel, to fully understand the implications of this non-competition covenant in their specific state. Understanding the limitations on outside business activities is crucial for planning and operating a successful Floors To Go franchise.