Does the post-termination non-compete clause for Pearce Bespoke apply to resale of any mobile business, or only those not offered by Pearce Bespoke?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee (and all Personal Guarantors and owners of all or part of Franchisee) will not, directly or indirectly, for a period of two (2) years after this Agreement expires or is terminated (except for a termination as a result of a Franchisor's breach), on their own account or as an employee, consultant, partner, officer, director, or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any resale of a mobile business not offered by Pearce Bespoke involving the purchase and/or sale of custom clothing and accessories located within the Franchised territory within a ten (10) mile radius of the thereof or any Pearce Bespoke Franchise. Franchisee expressly agrees that the two (2) year period and the ten (10) mile radius are the reasonable and necessary time and distance needed to protect Franchisor if this Agreement expires or is terminated for any reason.
C. Extension During Breach.
Franchisee (and all Personal Guarantors and owners of all or part of Franchisee) acknowledge and agree that the two (2) year non-competition period set forth in Section 18(B) above will be extended for a period of time equal to the time during which the Franchisee is in breach of any of the provisions of Section 18(B).
D. Injunctive Relief.
Franchisee agrees that damages alone cannot adequately compensate Franchisor if there is a violation of these non-competition covenants, and Franchisee stipulates that Franchisor would be irreparably harmed by such a violation and that preliminary and permanent injunctive relief is essential and must be entered for the protection of Franchisor, and Franchisee hereby agrees to waive any and all defenses to the entry of such injunction(s). Preliminary and permanent injunctive relief will be entered by a court of competent jurisdiction enforcing the non-competition covenants without Franchisor posting any bond or security, in addition to all other remedies that may be available to Franchisor at equity or law.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, the post-termination non-compete clause applies specifically to the resale of mobile businesses not offered by Pearce Bespoke. After the franchise agreement expires or is terminated, the franchisee is restricted from engaging in any resale of a mobile business involving custom clothing and accessories that Pearce Bespoke does not offer. This restriction applies for two years within a 10-mile radius of the former franchise location or any other Pearce Bespoke franchise.
This means that a former Pearce Bespoke franchisee cannot be involved in a competing mobile business that resells custom clothing and accessories, unless Pearce Bespoke already offers that specific business. The restriction covers various forms of involvement, including being an owner, operator, employee, consultant, or shareholder. The non-compete aims to protect Pearce Bespoke's market share and prevent franchisees from using the brand's knowledge and resources to benefit a competing venture.
The FDD also states that the two-year non-compete period can be extended if the franchisee breaches the non-compete agreement. Additionally, Pearce Bespoke can seek injunctive relief to prevent a franchisee from violating the non-compete terms, meaning a court order could stop the franchisee from engaging in the prohibited activities. This remedy is available without Pearce Bespoke having to post a bond or security.
For a prospective franchisee, this clause highlights the importance of understanding the scope and limitations of the non-compete agreement. It is crucial to recognize that after leaving the Pearce Bespoke system, there are restrictions on engaging in similar businesses, specifically those involving the resale of mobile custom clothing and accessories businesses not already offered by Pearce Bespoke. Franchisees should carefully consider these limitations before investing in a Pearce Bespoke franchise.