After the Gokhale Method franchise is terminated or expires, what are the non-competition covenants?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
| m.Conditionsforfranchisorapproval | Section14.2 | We have the right to impose conditions on thetransfertothe |
|---|---|---|
| oftransfer | extentwehavetopermittransferunderstatelaw. | |
| n.Franchisor’srightoffirstrefusalto | None | |
| acquirefranchisee’sbusiness | ||
| o.Franchisor’soptiontopurchase | None | |
| franchisee’sbusiness | ||
| p.Deathorincompetenceof | Section14.2 | The franchise agreement cannot be transferred upondeathor |
| franchisee | incompetence. | |
| q.Non-competitioncovenantsduring thetermofthefranchise | Section17.1 | You cannot: divert or attempt to divert any present or prospective customer; employ or seek to employ any person employed by us, our affiliates, or any of our franchisees; be involvedinanyCompetitiveBusiness. |
| r.Non-competitioncovenantsafter thefranchiseisterminatedorexpires | Section17.2 | You cannot be involved for a period of two (2) years in any business that iscompetitivewithourswithina10-mileradius of your former location or of any location then existing wheretheGokhaleSystemistaught. |
| s.Modificationofagreement | Section22and Section8.10 | No amendments to the franchise agreement may be made unless the agreement allows us to unilaterally change something or unless the change is mutually agreed to by the parties and executed in writing. Also, we may change the Systemfromtimetotime. |
| t.Integration/mergerclause | Section22 | Only the terms of the franchise agreement are binding (subjecttostatelaw). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 27–29)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to certain non-competition covenants. Specifically, for a period of two years, the franchisee cannot be involved in any business that is competitive with Gokhale Method. This restriction applies within a 10-mile radius of the former franchise location or any other location where the Gokhale System is being taught at the time of termination or expiration.
This non-compete clause prevents a former franchisee from directly leveraging the knowledge, training, and client relationships gained during their time with Gokhale Method to start a competing business in the immediate vicinity. The 10-mile radius is designed to protect existing Gokhale Method locations from direct competition by a former franchisee who might try to capitalize on the brand's reputation and established customer base.
It is important to note that the laws of the state in which the franchise is located will govern with respect to Section 17 and its enforcement, which includes the non-competition covenants. This means that the enforceability and interpretation of the non-compete agreement can vary depending on state law. Prospective franchisees should consult with a legal professional to understand how these covenants will be interpreted and enforced in their specific state.