For Ledgers franchises in Indiana, what is the geographic limit for non-competition agreements, as defined by the Territory granted in the Franchise Agreement?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement.
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- The Indiana Code 23-2-2.7-1 makes it unlawful for a Franchisor to terminate a franchise without good cause or to refuse to renew a franchise on bad faith, as well as providing other protections and rights to the franchisee.
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- In compliance with Indiana Code 12-2-2.7-1(9), any provisions in this Franchise Agreement relating to non-competition upon the termination or non-renewal of the Franchise Agreement shall be limited to a geographic area not greater than the Territory granted in this Franchise Agreement and shall be construed in accordance with Indiana Code 23-2-2.7-1(9).
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- Indiana Code section 23-2-2.7-1(10) prohibits the choice of an exclusive forum other than Indiana.
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- Indiana Code section 23-2-2.7-1(10) prohibits the limitation of litigation. The Indiana Secretary of State has interpreted this section to prohibit provisions in contracts regarding
liquidated damages.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, for franchises operating in Indiana, any non-competition provisions within the Franchise Agreement are limited to the geographic area defined as the franchisee's Territory. This means that if a franchisee leaves the Ledgers system, they can't compete within the specific area they were originally granted to operate.
Specifically, the FDD states that Indiana Code 12-2-2.7-1(9) dictates that non-competition clauses upon termination or non-renewal of the franchise must not extend beyond the Territory granted in the Franchise Agreement. This is further clarified by stating that the non-compete will be construed in accordance with Indiana Code 23-2-2.7-1(9).
Additionally, the Indiana revisions to Item 17 of the Disclosure Document state that Indiana Code section 23-27-1(9) prohibits provisions in a contract which require a franchisee to agree to a covenant not to compete with the franchisor for a period longer than three (3) years or in an area greater than the exclusive area granted by the Franchise Agreement upon termination or failure to renew the Franchise Agreement. The document clarifies that in Indiana, upon termination of the Franchise Agreement, a franchisee cannot be involved in a competing business for one (1) year within their exclusive Franchise Territory. This means that the geographic scope of the non-compete is tied directly to the Territory outlined in the franchise agreement.