If my Mr. Sandless franchise is transferred, does the post-term restriction on competitive businesses apply?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- 21.3.7 Your execution (or your principals' execution, as applicable) of a general release, in a form prescribed by us, of all claims against us and our officers, directors, agents, and employees.
Notwithstanding such release, you shall remain obligated under those provisions of this Agreement that expressly extend beyond the term hereof;
- 21.3.8 The buyer's execution of our then-current Single Unit Franchise Agreement as well as execution of a personal guaranty if a partnership, corporation or limited liability company;
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
The 2025 Mr. Sandless Franchise Disclosure Document (FDD) outlines specific post-term obligations that a franchisee must adhere to, even if the franchise is transferred. These obligations are designed to protect Mr. Sandless's brand and business model by preventing franchisees from using their knowledge and experience gained during the franchise term to compete against the system after they leave.
Specifically, the FDD states that even after a transfer, franchisees remain obligated under provisions of the agreement that expressly extend beyond the term. This means that the restrictions on operating a competitive business after the franchise term could still apply to the original franchisee, even if they have transferred the franchise to someone else. The exact terms and conditions of these post-term restrictions, including the duration and geographic scope, are detailed in the franchise agreement.
Therefore, if you are considering transferring your Mr. Sandless franchise, it is crucial to carefully review the franchise agreement and seek legal counsel to fully understand your post-term obligations. You should clarify whether these restrictions apply to you even after the transfer and what steps you need to take to ensure compliance. The buyer of your franchise will also need to execute the then-current Single Unit Franchise Agreement, which will contain its own set of obligations.