Is there a geographic limit to the post-term non-compete clause for a Moes Southwest Grill franchise?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Section 15.4.B. (Restrictive Covenants: Post Term) of the Franchise Agreement is revised to limit the geographical extent of the post-term covenant not to compete to an area of reasonable size, for all franchises sold in the State of Indiana.
CALIFORNIA ADDENDUM TO DISCLOSURE DOCUMENT
In recognition of the requirements of the California Franchise Investment Law, California Corporations Code §§ 31000 through 31516, and the California Franchise Relations Act, California Business and Professions Code §§ 20000 through 20043, the Disclosure Document for Moe's Franchisor SPV LLC in connection with the offer and sale of franchises for use in the State of California is amended to including the following:
1. ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
- D. The Franchise Agreement contains a covenant not to compete that extends beyond the termination of the franchise. This provision may not be enforceable under California law.
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to the 2025 Moe's Southwest Grill FDD, the geographic extent of the post-term covenant not to compete is limited to an area of reasonable size for franchises sold in the State of Indiana. This means that if you operate a Moe's Southwest Grill franchise in Indiana, the non-compete agreement you sign after the termination of your franchise will be restricted to a reasonable geographic area.
For franchisees in California, the FDD states that the Franchise Agreement contains a covenant not to compete that extends beyond the termination of the franchise. However, this provision may not be enforceable under California law. This suggests that while Moe's Southwest Grill includes a post-term non-compete in its standard agreement, its enforceability can vary significantly depending on state laws.
For prospective franchisees, it's essential to understand the specific non-compete terms and their enforceability in their state. Consulting with legal counsel is advisable to assess the implications of these clauses and how they might affect your future business opportunities after leaving the Moe's Southwest Grill system. The FDD also includes addenda for Maryland, North Dakota, Rhode Island, and Virginia, which may have additional state-specific regulations affecting the enforceability of certain franchise agreement terms.