Does the Gokhale Method agreement allow franchisees to engage in a Competitive Business during the term of the agreement?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
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- 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. If you do not immediately comply with this paragraph upon the end of our relationship, the two-year period referred to above will commence when you begin compliance.
- 17.3. Compliance With Anti-Terrorism Laws. You acknowledge that under applicable U.S. law, including, without limitation, Executive Order 13224, signed on September 23, 2001 (the "Executive Order"), we are prohibited from engaging in any transaction with any person engaged in, or with a person aiding any person engaged in, acts of terrorism, as defined in the Executive Order.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, franchisees are generally prohibited from engaging in any Competitive Business during the term of the agreement. A Competitive Business is defined as one that is the same as, or substantially similar to, the Franchised Business, or that offers to sell any services, equipment, products or other items which are the same as, or substantially similar to, those offered by Gokhale Method or its franchisees or Affiliates.
However, this prohibition does not apply to interests in or activities performed in connection with the franchisee's Gokhale Method Franchised Business. Furthermore, franchisees have the right to acquire, be acquired by, merge, affiliate with or engage in any transaction with any other businesses (whether competitive or not), with units located anywhere or business conducted anywhere. These transactions may include arrangements involving competing businesses or outlets and dual branding or brand conversions.
After the termination of the franchise agreement, a franchisee is restricted from engaging in a Competitive Business within a 10-mile radius of their former location or any existing Gokhale Method location for two years. This restriction applies whether the relationship ends through termination, expiration, or otherwise. The two-year period begins when the franchisee starts complying with the non-compete terms.
In summary, while franchisees are restricted from operating a separate competing business during the franchise term, they are allowed to engage in transactions with competitive businesses. Post-term, a non-compete clause restricts them for two years within a 10-mile radius of their former Gokhale Method location.