Does the Gokhale Method agreement allow a franchisee to sell services substantially similar to those offered by a Gokhale Method Institute location during the term of the agreement?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.1.3.
Own, maintain, operate, engage in, act as a consultant for, perform services for, or have any interest in any Competitive Business or offer to sell or sell any services, equipment, product or other item which is the same as, or substantially similar to, any of the services, equipment, products or other items offered by a Gokhale Method Institute location.
The prohibitions in this Section 17 shall not apply to interests in or activities performed in connection with your Franchised Business.
- 17.2.
Post-Term Covenants.
You covenant that, except as otherwise approved in writing by us, you shall not, within a 10-mile radius of your former Location or of any location then existing where the Gokhale Method is taught, and for a continuous, uninterrupted period of two (2) years following the end of our relationship with you, whether by termination, expiration or otherwise, either directly or indirectly own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in (as owner or otherwise) any Competitive Business.
A "Competitive Business" is a business that: is the same as, or substantially similar to, the Franchised Business; or that offers to sell or sells any services, equipment, products or other items which are the same as, or substantially similar to, any of the services, equipment, products or other items offered by us or our franchisees or Affiliates.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, during the term of the agreement, franchisees are restricted from engaging in any competitive business that offers services substantially similar to those offered by a Gokhale Method Institute location. This restriction is in place to protect the brand and the Gokhale Method system. However, this prohibition does not apply to activities performed in connection with the franchisee's own franchised business.
The agreement specifies that franchisees cannot own, maintain, operate, consult for, perform services for, or have any interest in any competitive business. This includes offering or selling services, equipment, products, or other items that are the same as or substantially similar to those offered by a Gokhale Method Institute location. This is a standard clause in franchise agreements to prevent franchisees from directly competing with the franchisor or other franchisees within the system.
After the termination of the franchise agreement, a franchisee is restricted from operating a competitive business within a 10-mile radius of their former location or any existing Gokhale Method location for two years. A competitive business is defined as one that is the same as or substantially similar to the franchised business or offers similar services, equipment, or products. This post-term covenant aims to further protect Gokhale Method's market and brand integrity even after the franchise relationship ends.
Overall, these covenants ensure that franchisees focus on growing their Gokhale Method business and do not divert customers or resources to competing ventures during the term of the agreement and for a limited time afterward. Franchisees should carefully consider these restrictions and how they might impact their future business opportunities.