Do the obligations in Section 10 of the Gokhale Method Franchise Agreement survive termination?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.11. Compliance With Covenants. You shall comply with the covenants contained in Section 17 of this Agreement.
17. COVENANTS
- 17.1. In-Term Covenants. You specifically acknowledge that, pursuant to this Agreement, you will receive valuable, specialized training and Confidential Information, including, without limitation, information regarding the Gokhale Method and techniques used by us and the System.
You covenant that during the Term of this Agreement, except as otherwise approved in writing by us, you shall not, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or legal entity:
- 17.1.1.
Divert or attempt to divert any present or prospective customer of any Gokhale Method class, service or product to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System;
- 17.1.2.
Employ or seek to employ any person who is at that time employed by us, our Affiliates, or by any of our other franchisees, or otherwise directly or indirectly induce such person to leave his or her employment; or
- 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.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
Based on the 2024 Gokhale Method Franchise Disclosure Document, Section 16 outlines obligations upon termination or expiration of the agreement. These include ceasing operations as a Gokhale Method franchise, discontinuing the use of Gokhale Method's intellectual property and marks, canceling any assumed name registrations containing "Gokhale", and at the franchisor's option, assigning the lease for the business location.
Additionally, franchisees must comply with the covenants in Section 17 of the agreement, which include in-term and post-term covenants. During the term of the agreement, franchisees are prohibited from diverting customers to competitors or engaging in activities that harm the goodwill associated with Gokhale Method.
Post-term covenants restrict franchisees from engaging in any competitive business within a 10-mile radius of their former location or any existing Gokhale Method location for two years after the relationship ends. These obligations and restrictions indicate that certain duties and covenants within the Gokhale Method Franchise Agreement, particularly those related to intellectual property, non-competition, and brand representation, do survive the termination or expiration of the agreement.