For Ledgers franchises in Indiana, what is the maximum geographic area for non-competition agreements after termination or non-renewal?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
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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, Indiana law limits the geographic scope of non-compete agreements to the territory granted in the Franchise Agreement. This means that if a Ledgers franchisee in Indiana leaves the system, either through termination or non-renewal of the agreement, they can only be restricted from competing within the specific territory they were initially granted.
Specifically, Indiana Code 23-27-1(9) states that a franchisee cannot be required to agree to a covenant not to compete for a period longer than three years or in an area greater than the exclusive area granted by the Franchise Agreement. However, another section of the document states that upon termination of the Franchise Agreement, you cannot be involved in a competing business for one year within your exclusive Franchise Territory.
This provision is more favorable to the franchisee than some standard non-compete clauses, which often extend to larger geographic areas, such as entire states or regions. Prospective Ledgers franchisees in Indiana should carefully review Schedule 1 of their Franchise Agreement, which defines their specific territory, to understand the exact scope of this non-compete restriction. They should also note the discrepancy in the length of time for the non-compete, as one section states three years, while another states one year.