Can a Focus Cfo franchisee challenge the restrictive covenants in the agreement?
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, a franchisee generally waives their right to challenge the restrictive covenants within the franchise agreement. Specifically, the franchisee acknowledges that these covenants are essential and reasonable for protecting Focus Cfo, its system, and its marks. The franchisee agrees that the terms, including the restrictive covenants, are fair and reasonably required for protection and explicitly waives any right to challenge these restrictions as overly broad, unreasonable, or unenforceable. This waiver is a significant point for prospective franchisees to consider, as it limits their legal recourse regarding non-compete and non-solicitation clauses.
However, the FDD also states that if a court deems any provision unenforceable due to its duration or geographic scope, the parties agree that the court can reduce the duration or area to make it enforceable. This clause suggests that while franchisees waive their right to an initial challenge, there is a mechanism for judicial review and potential modification of the covenants if they are found to be overly restrictive. This ensures that the restrictive covenants are not excessively broad and remain within reasonable bounds.
Notably, an addendum to the Franchise Agreement specifies that for franchisees operating in North Dakota, covenants not to compete are generally considered unenforceable. This indicates that the enforceability of restrictive covenants can vary by jurisdiction, and Focus Cfo acknowledges the legal landscape in certain states. Therefore, while the standard agreement includes a waiver of the right to challenge, this may not be applicable or fully enforced in all locations, particularly where local laws disfavor such restrictions. Prospective franchisees should carefully review the specific terms of their agreement and any addenda, and consult with legal counsel to understand the enforceability of these covenants in their specific jurisdiction.