Are covenant not to compete provisions that extend beyond the termination of the Kidokinetics Franchise necessarily enforceable under California law?

According to the 2024 Kidokinetics Franchise Disclosure Document, the enforceability of covenant not to compete provisions that extend beyond the termination of the franchise agreement is uncertain under California law. Specifically, the FDD states that such provisions "may not be enforceable" in California. This means that if a franchisee were to leave the Kidokinetics system and start a competing business, the franchisor's ability to legally prevent them from doing so through the non-compete agreement is not guaranteed.

This uncertainty stems from California's general disfavor of non-compete agreements, as they are often seen as restricting an individual's ability to earn a living. While there are some exceptions, such as in the sale of a business, the standard franchise relationship may not always fall under these exceptions. Therefore, a Kidokinetics franchisee in California should be aware that the non-compete clause in their agreement might not be fully enforceable.

Given this uncertainty, prospective Kidokinetics franchisees in California should consult with an attorney to fully understand the implications of the non-compete provision. They should discuss the specific language of the agreement, the potential scope of the restriction, and the likelihood of it being enforced in a California court. This will help them make an informed decision about whether to invest in a Kidokinetics franchise and what steps they can take to protect their interests should they ever decide to leave the system.