What is the geographic limit of the non-competition covenant after the Gokhale Method franchise is terminated or expires?
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 the 2024 Gokhale Method Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-compete covenant. This means the franchisee cannot be involved in any business that competes with Gokhale Method for two years. This restriction applies within a 10-mile radius of the former franchise location or any existing location where the Gokhale Method is taught.
This non-compete agreement prevents former franchisees from using the knowledge and training they gained while operating a Gokhale Method franchise to start a competing business nearby. The 10-mile radius is designed to protect Gokhale Method's market share and prevent unfair competition within areas where the brand has a presence.
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. Prospective franchisees should seek legal counsel to fully understand the implications of the non-compete agreement in their specific state and how it might affect their future business opportunities after leaving the Gokhale Method system.