What activities are prohibited under the non-compete covenant for Precision Door Service?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
ings to seek the entry of protective orders or other appropriate relief. Nothing in this Agreement shall be construed to interfere with a party's obligations to comply with lawful court orders; however, no disclosure of Confidential Information by a party pursuant thereto shall be deemed to place the Confidential Information in the public domain or to relieve the party from the future performance of all its confidentiality obligations under this Agreement, absent express orders of the court to the contrary.
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- Covenant Not to Compete. Except as otherwise approved in writing by Franchisor, you may not, directly or indirectly, through, on behalf of, or in conjunction with, any other person, partnership, or legal entity, own, maintain, operate, or engage or participate in, inure benefit to, or have any financial interest, either as an officer, agent, employee, principal, partner, director, shareholder or any other individual or representative capacity, in any corporation, partnership or other legal entity that engages in any business that is the same as or similar to the Franchise, or is otherwise in competition with the business of Franchisor or Franchisor's franchisees, that engages in the distribution of similar products, services and/or equipment and that is located (a) anywhere, while the Franchise Agreement is in effect or (b) (i) within the territory specified on the Data Sheet to the Franchise Agreement, (ii) within a 35-mile radius
Source: Item 23 — Receipts (FDD pages 92–433)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, franchisees are restricted from engaging in activities that compete with the franchise. Specifically, unless approved in writing by Precision Door Service, a franchisee cannot directly or indirectly own, maintain, operate, or participate in any business that is the same as or similar to the Precision Door Service business.
This non-compete extends to involvement with any entity that competes with Precision Door Service or its franchisees, including businesses engaged in the distribution of similar products, services, or equipment. The restriction applies regardless of the franchisee's capacity, whether as an officer, agent, employee, principal, partner, director, shareholder, or any other representative.
However, the FDD also states that the definition of 'Competitive Business' does not include any business that derives 80% or more of its revenue from servicing commercial, and not residential, customers. Furthermore, a franchisee may acquire up to 5% of any class of securities of any company engaged in a Competitive Business in the territory so long as they hold such securities as a passive investment and do not take an active part in the management or direction of such company and do not act as a consultant therefor or in any way render services thereto. This allows for limited passive investment in competing businesses.
This non-compete agreement aims to protect Precision Door Service's market position and the interests of its franchisees by preventing franchisees from using their knowledge and resources gained from the franchise to directly compete with the system. Franchisees should carefully consider these restrictions and how they might impact future business ventures.