What is the Management Recruiters franchisee's responsibility regarding advising the franchisor of facts related to an employee's threatened violation of a non-compete agreement?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
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 the 2024 Management Recruiters Franchise Disclosure Document, a franchisee has specific responsibilities regarding employee covenants not to compete. The franchisee is required to obtain agreements from their employees, within five days of the franchise agreement date or the employee's hire date (whichever is later), that include covenants not to compete, not to solicit customers or employees for a competing business, and not to disclose confidential information to a competing business. These agreements must be satisfactory in form and substance to Management Recruiters and are enforceable by Management Recruiters against the employee.
If a Management Recruiters franchisee becomes aware of any actual or threatened violation of these covenants by an employee, the franchisee must fully advise Management Recruiters in writing within ten days of becoming aware of the violation. This written notice must include all related facts known to the franchisee regarding the violation.
The Management Recruiters franchisee can take action to prevent or stop any such violation as they deem appropriate, at their own expense. However, the franchisee cannot waive their rights or give any release without the express written consent of Management Recruiters. Management Recruiters retains the right to request that the franchisee take action or to take action themselves to prevent or stop the violation. The franchisee is obligated to cooperate with Management Recruiters in preventing or stopping any such violation, including instituting or permitting a demand, suit, or action in the franchisee's name if Management Recruiters deems it necessary. If Management Recruiters makes such a demand, it will bear the expense of the suit or action unless otherwise agreed.