If a covenant restricting competitive activity in the Focus Cfo franchise agreement is deemed unenforceable, what happens?
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, if a covenant restricting competitive activity is deemed unenforceable due to its scope, area, prohibited business activity, or length of time, the franchisee agrees that the covenant will be enforced to the fullest extent permissible under the laws and public policies of the relevant jurisdiction. This means that even if a specific part of the non-compete agreement is found to be too broad or restrictive, the remaining parts that are legally sound will still be upheld.
This provision ensures that Focus Cfo retains as much protection as possible against unfair competition from former franchisees. It prevents a franchisee from completely escaping the non-compete obligations simply because one aspect of it is deemed unenforceable. The courts will modify the covenant to make it enforceable to the maximum extent allowed by law, rather than striking it down entirely.
For a prospective Focus Cfo franchisee, this means that the non-compete obligations are taken seriously and are designed to be as robust as legally possible. Franchisees should be aware that even if they believe a portion of the non-compete is unreasonable, they may still be bound by a modified version of it. It is advisable to seek legal counsel to fully understand the implications of the non-compete agreement within their specific jurisdiction.