What is the Management Recruiters franchisee's obligation regarding covenants from their employees related to non-competition, non-solicitation, and confidential information?
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, franchisees are required to obtain covenants from their employees regarding non-competition, non-solicitation, and confidential information where allowed by law. Specifically, within five days of the franchise agreement date or the employee's hire date (whichever is later), the franchisee must secure agreements from each employee that prevent them from competing with Management Recruiters, soliciting customers or employees for competing businesses, or sharing confidential information with competitors. These covenants must be in a form and substance satisfactory to Management Recruiters.
These covenants and agreements are established to benefit and be enforceable by Management Recruiters against the employee, providing Management Recruiters with direct legal recourse should an employee violate these terms. If a franchisee becomes aware of any actual or threatened violation by an employee, they must inform Management Recruiters in writing within ten days, detailing all related facts known to them.
The franchisee can take action to prevent or stop any violation they deem appropriate, at their own expense, but they cannot waive their rights or give any release without Management Recruiters' express written consent. Management Recruiters retains the right to request the franchisee to take action or to take action themselves to prevent or stop any violation. The franchisee is obligated to cooperate with Management Recruiters in preventing or stopping violations, including instituting legal actions in the franchisee's name if necessary. If Management Recruiters makes such a demand, it will bear the expense of the legal action unless otherwise agreed upon.