Does the Gokhale Method agreement specify what happens if the franchisee violates the post-term covenants?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
The 2024 Gokhale Method Franchise Disclosure Document (FDD) outlines post-term covenants but does not explicitly detail the consequences of violating these covenants. Section 17.2 specifies that a franchisee, after the termination or expiration of their agreement, cannot engage in 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 substantially similar to the Gokhale Method's franchised business. The two-year period begins when the franchisee starts complying with the covenant if they initially fail to do so.
While the FDD specifies the restrictions placed upon franchisees after the termination of their agreement, it does not describe the specific actions Gokhale Method may take if a franchisee violates these post-term covenants. It is common in franchising to include clauses that allow the franchisor to seek injunctive relief (a court order to stop the violating activity), monetary damages, and legal fees from franchisees who breach non-compete agreements.
Because the FDD does not specify the consequences for violating post-term covenants, prospective franchisees should seek clarification from Gokhale Method regarding the remedies available to them if a franchisee breaches these covenants. Understanding the potential legal and financial repercussions of violating these covenants is crucial for making an informed decision about investing in a Gokhale Method franchise.