Does the Focus Cfo franchise agreement specify which jurisdiction's law determines the validity of a covenant restricting competitive activity?
Focus_Cfo Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly provided to the contrary in this Agreement, each section, paragraph, term, and
provision of this Agreement is severable, and if, for any reason, any part is held to be invalid or contrary to or in conflict with any applicable present or future law or regulation in a final, unappealable ruling issued by any court, agency, or tribunal with competent jurisdiction, that ruling will not impair the operation of, or otherwise affect, any other provisions of this Agreement, which will continue to have full force and effect and bind the parties. If any covenant which restricts competitive activity is deemed unenforceable by virtue of its scope in terms of area, business activity prohibited, and/or length of time, but would be enforceable if modified, Franchisee agrees that the covenant will be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction whose law determines the covenant's validity.
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to the 2025 Focus Cfo Franchise Disclosure Document, the franchise agreement addresses the jurisdiction whose law determines the validity of a covenant restricting competitive activity. Specifically, if a court deems any covenant restricting competitive activity unenforceable due to its scope (area, prohibited business activity, or length of time), but finds it would be enforceable if modified, the franchisee agrees that the covenant will be enforced to the fullest extent permissible. This enforcement will be under the laws and public policies applied in the jurisdiction whose law determines the covenant's validity.
This means that the specific jurisdiction's laws regarding non-compete agreements will be used to interpret and enforce the covenant. This could significantly impact the enforceability of the non-compete, depending on the specific laws of that jurisdiction. Some states have stricter standards for non-competes than others, and this clause ensures that the non-compete is interpreted in light of those specific laws.
For a prospective Focus Cfo franchisee, this clause highlights the importance of understanding the non-compete laws in their specific jurisdiction. It also suggests that the franchisor is willing to have the non-compete agreement modified to be enforceable, rather than abandoning it altogether. Franchisees should consult with legal counsel to understand the implications of this clause and the enforceability of the non-compete in their area.