Who benefits from the employee covenants not to compete obtained by the Management Recruiters franchisee?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.3. Employees' Covenants Not to Compete, Non-Solicitation, Confidential Information. Where allowed by Law, Franchisee shall obtain from each of its employees within five (5) days after the date of this Agreement, or the date of employment of each employee, whichever is later, covenants and agreements not to compete, not to solicit customers or employees to a competing business, and not to divulge confidential information to a competing business all in form and substance satisfactory to Franchisor.
Such covenants and agreements shall be for the benefit of and enforceable by Franchisor against the employee.
In the event that Franchisee becomes aware of any actual or threatened violation of any such covenants and agreements by any of its employees, Franchisee shall within ten (10) days of becoming aware of such actual or threatened violation fully advise Franchisor in writing of all related facts known to Franchisee regarding same.
Franchisee may take action to prevent or stop any such violation as it deems appropriate, at its own expense, except that, it may not waive its rights or give any release without the express written consent of Franchisor.
Franchisor may request that Franchisee take action or may take action itself to prevent or stop any such actual or threatened violation.
Franchisee will cooperate with Franchisor in all ways reasonably requested by Franchisor to prevent or stop any such violation, including, without limitation, instituting or permitting to be instituted in the name of Franchisee any demand, suit, or action which Franchisor determines to be necessary or appropriate.
If Franchisor makes any such demand, the suit or action will be maintained and prosecuted at the expense of Franchisor unless otherwise agreed.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the employee covenants not to compete are for the benefit of and enforceable by the franchisor, Management Recruiters, against the employee. This means that Management Recruiters, not the franchisee, is the direct beneficiary of these agreements. The franchisee is responsible for obtaining these covenants from their employees within a specific timeframe.
The Management Recruiters franchisee must secure these covenants from each employee within five days of the franchise agreement date or the employee's hire date, whichever is later. These covenants must prevent employees from competing, soliciting customers or employees for a competing business, and divulging confidential information to a competing business. The covenants' form and substance must be satisfactory to Management Recruiters.
If a Management Recruiters franchisee becomes aware of any actual or threatened violation of these covenants, they must inform Management Recruiters in writing within ten days. While the franchisee can take action to prevent or stop violations at their own expense, they cannot waive rights or grant releases without Management Recruiters' express written consent. Management Recruiters retains the right to request the franchisee to take action or to take action themselves, with the franchisee required to cooperate in preventing or stopping any violation. Management Recruiters will bear the expense of any legal action unless otherwise agreed.