After the expiration or termination of the Mrcool Franchise Agreement, for how long are franchisees restricted from participating in a competitive business?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
You and, if you are a Corporate Entity, each of your members, shareholders and/or partners (collectively, "Owners"), must personally guarantee all of your obligations to us under the Franchise Agreement. Each Owner and the spouse of each Owner must personally guarantee your obligations to us under the Franchise Agreement. You and each Owner and spouse must also promise in writing that, among other things, during the term of the Franchise Agreement you will not participate in any business that in any way competes with the Franchised Business, and that for 24 months after the expiration of termination of the Franchise Agreement (with said period being tolled during any periods of non-compliance), neither you nor your Owners and their spouses will participate in any competitive business located within and/or servicing customers located within your Designated Territory and a 25 mile radius surrounding your Designated Territory. Further you will not participate in any competitive business located within and/or servicing customers located within a 10 mile radius of any other MRCOOL Center and/or the designated territory of any other MRCOOL Center. Your managers and all other employees and agents with access to our confidential information will be required by us to sign a confidentiality agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 42)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, both the franchisee and their owners/spouses are subject to a non-compete agreement for 24 months after the expiration or termination of the Franchise Agreement. This period can be extended if the franchisee is not in compliance with the agreement, with the non-compete period being tolled during non-compliance.
The non-compete restrictions prevent the franchisee, owners, and their spouses from participating in any competitive business within the franchisee's Designated Territory and a 25-mile radius surrounding it. Furthermore, they are prohibited from engaging in a competitive business within a 10-mile radius of any other Mrcool Center or its designated territory.
These post-term non-compete clauses are common in franchising to protect the brand and other franchisees. Prospective Mrcool franchisees should carefully consider the scope and duration of these restrictions, as they could significantly limit their business opportunities after leaving the Mrcool system. It is important to understand the definition of "competitive business" as defined in the Franchise Agreement to fully grasp the extent of these limitations.