After the Lees Famous Recipe agreement expires, for how long does the post-term covenant not to compete last?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
Post-Term Covenant Not to Compete.
You and each Principal Owner will not, for a period of two (2) years after this Agreement expires or is terminated, directly or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation: (1) divert or attempt to divert any business or customers of the Restaurant(s) to any Competing Business or perform any act that would damage the goodwill associated with the Marks or the System; (2) own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in, or assist any person or entity engaged in any Competing Business that is located (i) in the Development Area, (ii) within a five (5) mile radius of the Development Area, or (iii) within a five (5) mile radius of any other then-existing Lee's Famous Recipe Restaurant; provided, however, that this Section 12(B) will not apply to: (i) other Lee's Famous Recipe Restaurants that you operate under any effective Lee's Famous Recipe franchise agreements; or (ii) the ownership of securities listed on a stock exchange or traded on the over-the-counter market that represent one percent (1%) or less of that class of securities.
- C.
Injunctive Relief.
You agree that damages alone cannot adequately compensate us if there is a violation of any covenant in this Section in that injunctive relief is essential for our protection.
You therefore agree that we may seek injunctive relief without posting any bond or security, in addition to the remedies that may be available to us at equity or law, if you or anyone acting on your behalf violates any covenant in this Section.
The covenants stated in this Section will survive the termination or expiration of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 70–287)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe Franchise Disclosure Document, both the franchisee and each Principal Owner are subject to a two-year post-term covenant not to compete. This restriction begins immediately after the franchise agreement expires or is terminated.
During this two-year period, the franchisee and Principal Owners are prohibited from engaging in any activities that could divert business or customers from Lees Famous Recipe to a competing business. They are also barred from actions that could damage the goodwill associated with the Lees Famous Recipe brand, trademarks, or system. This includes owning, operating, or being involved with any competing business within the Development Area or within a five-mile radius of the Development Area or any existing Lees Famous Recipe Restaurant.
However, there are exceptions to this non-compete clause. The restrictions do not apply to other Lees Famous Recipe Restaurants operated by the franchisee under effective franchise agreements. Additionally, the ownership of securities listed on a stock exchange or traded over-the-counter, representing one percent or less of that class of securities, is also exempt from the non-compete restrictions.
Lees Famous Recipe emphasizes the importance of injunctive relief in the event of a breach of the non-compete agreement, stating that damages alone may not adequately compensate for a violation. The franchisor retains the right to seek injunctive relief, without posting bond or security, in addition to any other legal or equitable remedies available to them.