For how long after the expiration or termination of the Management Recruiters Franchise Agreement is the franchisee restricted from engaging in a competing business?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
ress 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.
- 17.4. Franchisee's Covenant Not to Compete, Not to Solicit, and Not to Share Confidential Information Following Expiration or Termination. Upon expiration or termination of this Agreement for any reason, Franchisee, its Principals and, as applicable, its partners, members, and its shareholders (and their respective Family Members) shall not, for a period of two (2) years thereafter, (i) have any interest, directly or indirectly, as an owner, manager, employee, operator, consultant, agent, principal, partner, member, stockholder, corporate officer, director or in any other capacity, or in any other manner whatsoever, in any business, venture, program or enterprise the primary function of which is to provide temporary or permanent employee placement, or otherwise engage or participate in any business that is a "competing business" as that term is defined in Section 15.1, (ii) directly or indirectly, induce, influence, or encourage any client or customer of the Franchise Business to alter, terminate, or breach its contractual or other business relationship with Franchisor, or the Franchise Business, or
solicit it to do business with any "competing business" as that term is defined in Section 15.1, (iii) directly or indirectly, solicit for employment or otherwise induce, influence, or encourage to terminate employment with the Franchise Business, or employ or engage as an independent contractor, any person who is a then current employee of the Franchise Business or any business that operates as a franchisee of Franchisor, or (iv) not share with any "competing business" as that term is defined in Section 15.1, any confidential information or Trade Secrets of Franchisor, the Franchise Business, or Franchisee.
17.5. Exceptions; Publicly-Traded Stock. The restrictions in this Section 17.4 shall not apply to ownership of securities traded on a nationally recognized stock exchange that constitute less than three percent (3%) of the shares of the class of securities issued and outstanding, or to the conduct of other Franchise Businesses pursuant to franchise agreements with Franchisor.
18. IMAGE AND OPERATING STANDARDS
- 18.1. Services. Franchisee shall offer all services designated by Franchisor. Franchisee shall not, without Franchisor's written approval, offer any services or products in connection with the Franchise Business that are not authorized by Franchisor.
- 18.2. Brand Standards Materials. Franchisee acknowledges that every detail of the Franchise Business's operation as it relates to the MRI brand, the appearance of the business, the quality of the supplies used, and range of services offered is critically important to Franchisor, other MRI franchisees, and to Franchisee's clients and customers.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, a franchisee, its principals, and their family members are subject to a non-compete covenant for two years following the expiration or termination of the Franchise Agreement. This restriction prevents them from having any direct or indirect interest in a business whose primary function is to provide temporary or permanent employee placement, or from engaging in any business that is considered a "competing business."
Specifically, the franchisee is prohibited from acting as an owner, manager, employee, operator, consultant, agent, principal, partner, member, stockholder, corporate officer, or director in a competing business. They are also barred from inducing or encouraging clients or customers of the Management Recruiters franchise to terminate or alter their relationship with the franchisor or the franchise business, or from soliciting them to do business with a competing entity.
Additionally, the franchisee cannot solicit employees of the Management Recruiters franchise or other franchisees, nor can they share confidential information or trade secrets with any competing business. There is an exception for ownership of securities traded on a nationally recognized stock exchange, provided that the ownership constitutes less than 3% of the outstanding shares. However, Management Recruiters will waive the post-termination competitive restrictions if the franchisee exercises the buy-out procedures described in Section 17 of the agreement.