For Ledgers franchises in Indiana, what is the specific Indiana Code section that limits non-competition agreements?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Indiana Code section 23-27-1(9) prohibits provisions in 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. Accordingly, in the State of Indiana, upon termination of the Franchise Agreement, you cannot be involved in a competing business for one (1) year within your exclusive Franchise Territory.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, Indiana Code section 23-27-1(9) addresses non-competition agreements for franchises operating within Indiana. This law states that any non-compete covenant cannot exceed three years and must be limited to the exclusive area granted by the Franchise Agreement.
Specifically, upon termination or failure to renew the Franchise Agreement in Indiana, a franchisee cannot be involved in a competing business for more than one year within their exclusive Franchise Territory. This means that Ledgers franchisees in Indiana have some protection under state law regarding the enforcement and scope of non-compete clauses.
This Indiana code impacts the standard non-compete terms typically found in franchise agreements, ensuring they are reasonable and do not unduly restrict a franchisee's ability to earn a living after leaving the Ledgers system. Prospective franchisees should carefully review the Franchise Agreement and understand how Indiana law modifies the standard non-compete provisions, particularly regarding the duration and geographic scope of the restriction.