For how long after the expiration or termination of the Management Recruiters agreement is the franchisee prohibited from contacting clients of the Franchise Business?

According to Management Recruiters' 2024 Franchise Disclosure Document, franchisees are restricted from contacting clients of the Franchise Business for two years after the expiration or termination of their Franchise Agreement. Specifically, the franchisee is prohibited from contacting clients to offer services similar to those provided by the Management Recruiters business.

This restriction is in place because Management Recruiters recognizes that the franchisee's client base is largely derived from their affiliation with Management Recruiters and the goodwill associated with the brand's marks. Therefore, the client base's benefit should revert to Management Recruiters upon the agreement's end. To this end, the franchisee must also hand over all materials identifying the clients to Management Recruiters, allowing Management Recruiters to directly utilize those customer lists.

This non-contact provision aims to protect Management Recruiters' established client relationships and prevent unfair competition from former franchisees. Failure to comply with this section of the agreement is explicitly defined as an unfair method of competition, which could expose the franchisee to legal repercussions.

In addition to the restriction on contacting clients, the franchisee is also subject to a broader non-compete agreement for two years following the termination or expiration of the agreement. This agreement prevents the franchisee from engaging in any competing business, soliciting clients or employees of the franchise, or sharing confidential information.