Are Mrcool franchisees subject to non-competition covenants after the franchise is terminated or expires?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
| Patent Number (P) (If Issued) or Serial Number (S) (If Not Yet Issued) | Filing Date | Type of Patent | Title | |------------------------------------------------------------------------------|-------------------|----------------|--------------------------------------------------------| | 1010776 | January 9, 2024 | Utility | Female Quick-Connect Connector | | 1008426 | December 9, 2023 | Utility | Quick-Connect Coupler | | 1008425 | December 19, 2023 | Utility | Male Quick-Connect Connector | | 11982451 | May 14, 2024 | Utility | Apparatus and Process for Amateur HVAC Installation | | 11747025 | September 5, 2023 | Utility | Apparatus and Process for Amateur HVAC Installation | No other patents or patent applications are material to the franchise. Once issued, patents generally continue for 20 years from the initial filing date. Our right to use this patent is not materially limited by any agreement or known infringing use.
We have copyrighted or may copyright advertising materials and design specifications, our Manuals and other written materials and items. We have not applied to the United States Copyright Office to register these copyrights.
You must keep as confidential our Manuals and any supplements to the Manuals. Our Manuals may take the form of written materials and/or digitally distributed and stored materials and made available to you for use in connection with the Franchised Business. The Manuals contain information about our System, Approved Services and Products, System Supplies, proprietary products, marketing systems, training, and confidential methods of operation. You must use all reasonable and prudent means to maintain the Manuals and the information maintained in the Manuals as confidential and prevent any unauthorized copies, recordings, reproduction, or distribution of the Manuals or the information contained in the Manuals. You must also restrict access to the Manuals to management level employees who sign a confidentiality agreement with you and are required by you to maintain the confidentiality of the Manuals and refrain from distributing or disclosing the Manuals and the information contained in the Manuals. You must provide us with immediate notice if you learn of any unauthorized use of the Manuals or of the information contained
in the Manuals, or any infringement or challenge to the proprietary or confidentiality of the information contained in the Manuals. We will take any and all action(s) or, refrain from taking action, that we determine, in our discretion, to be appropriate. We may control any action or legal proceeding we choose to bring. We need not participate in your defense or indemnify you for damages or expenses in a proceeding involving a copyright or patent. If any third party establishes to our satisfaction, in our discretion, that it possesses rights superior to ours, then you must modify or discontinue your use of these materials in accordance with our written instructions.
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS
The Franchise Agreement requires that you or, if you are a Corporate Entity, your designated managing shareholder, member or partner (your "Managing Owner") be personally responsible for the management and overall supervision of your Center. Your Managing Owner must complete, to our satisfaction, our initial training program and be approved by us. While we recommend that your Managing Owner personally participate in the day-to-day management and on-site supervision and operations of your Center, you may hire an operating manager to supervise and manage the day-to-day on-site operations of your Center provided that your operating manager: (a) meets all of our minimum standards and criteria for managers; (b) completes our initial training program; and (c) signs our confidentiality agreements (an "Operating Manager"). At all times, your Center must be managed and supervised on-site by either a Managing Owner or Operating Manager. If you own and operate multiple Centers then each Center must be managed and supervised on-site by an Operating Manager.
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.
ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
You may only sell the Approved Services and Products as specified in the Manuals or otherwise approved by us in writing and may only sell the products and services required by us. We can change the products and services that you must offer. There is no limitation on our right to change the products and services offered sold by MRCOOL Centers. You are not limited to whom you may sell products and services of your MRCOOL Center, provided you do so exclusively from your Center Location and as otherwise required by and in compliance with the standards we determine for the System.
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
The Franchise Relationship Under a Single Unit Franchise Agreement
THE FRANCHISE RELATIONSHIP
This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this Disclosure Document.
| r. Non-competition covenants after the franchise is terminated or expires | 6, 17.E. | No involvement, ownership or interest whatsoever for 24 months in any competing business in: your Designated Territory; a 25-mile radius of your Designated Territory; a 10-mile radius of the Designated Territory of any other Center; and you must comply with confidentiality, non- disclosure and non-solicitation covenants. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, franchisees are subject to non-competition covenants after the franchise is terminated or expires. Specifically, a franchisee cannot have any involvement, ownership, or interest in a competing business for 24 months.
The restricted area includes the franchisee's Designated Territory, a 25-mile radius around their Designated Territory, and a 10-mile radius around any other Mrcool Center's Designated Territory. Additionally, franchisees must continue to comply with confidentiality, non-disclosure, and non-solicitation covenants.
These post-term non-compete restrictions are fairly standard in the franchise industry to protect the brand's market share, customer relationships, and proprietary information. A prospective Mrcool franchisee should carefully consider the geographic scope and duration of these restrictions, as they could limit their ability to work in the same industry after leaving the Mrcool system. It is important to fully understand these obligations before signing the Franchise Agreement.