Who determines if the restrictive covenants in the Focus Cfo agreement are overly broad?
Focus_Cfo Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that the restrictive covenants contained in this Section 13 are essential elements of this Agreement and that without their inclusion Focus CFO would not have entered into this Agreement.
Franchisee acknowledges that each of the terms set forth herein, including the restrictive covenants, is fair and reasonable and is reasonably required for the protection of Focus CFO, the Focus CFO System and the Focus CFO Marks and Franchisee waives any right to challenge these restrictions as being overly broad, unreasonable or otherwise unenforceable.
If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination will have the power to reduce the duration and/or area of such
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to the 2025 Focus Cfo Franchise Disclosure Document, if any provision regarding restrictive covenants is deemed unenforceable due to its scope, duration, or area covered, a court will determine the enforceability of the covenant. The parties involved agree that the court making such a determination has the power to reduce the duration and/or area of the provision.
Focus Cfo requires franchisees to acknowledge that the restrictive covenants within the agreement are essential. Franchisees also acknowledge that the terms, including the restrictive covenants, are fair, reasonable, and necessary to protect Focus Cfo, its system, and its marks. By signing the agreement, franchisees waive their right to challenge these restrictions as overly broad, unreasonable, or unenforceable.
This means that while Focus Cfo aims to have franchisees agree to the reasonableness of the restrictive covenants upfront, the final decision on whether these covenants are overly broad rests with the court. This is a fairly standard clause in franchise agreements, as courts ultimately have the power to interpret and enforce contracts.
Prospective franchisees should carefully review the restrictive covenants with legal counsel to understand their scope and potential impact. While franchisees waive their right to challenge the restrictions upon signing, understanding the potential limitations and agreeing to them is crucial. If a franchisee later believes the covenants are overly broad, they would have to persuade a court to overrule their initial waiver, which could be a difficult legal challenge.