During the term of the Gokhale Method franchise, can I divert or attempt to divert any present or prospective customer?
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, as a franchisee, you are prohibited from diverting or attempting to divert any present or prospective customer during the term of the franchise agreement. This restriction is part of the non-competition covenants outlined in Section 17.1 of the franchise agreement. Additionally, you are not allowed to employ or seek to employ any person employed by Gokhale Method, its affiliates, or any of its franchisees, and you cannot be involved in any Competitive Business. These restrictions are designed to protect Gokhale Method's customer base and business interests.
These non-competition covenants are common in franchising to protect the brand and prevent franchisees from using the franchisor's resources and reputation to unfairly compete. The restrictions apply during the entire term of the franchise agreement, which, according to Section 3.1, is five years.
After the franchise is terminated or expires, Section 17.2 states that you are restricted from being involved in any business that competes with Gokhale Method within a 10-mile radius of your former location or any existing Gokhale Method location for a period of two years. This post-term non-compete clause further protects Gokhale Method's market and business interests even after the franchise relationship ends. It is important to note that the laws of the state in which your franchise is located will govern with respect to Section 17 and its enforcement.