What is the duration of the non-compete covenant for Precision Door Service after termination or association ends?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
Covenant Not to Compete.
Except as otherwise approved in writing by the applicable Neighborly 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 (any such business, "Competitive Business") that is the same as or similar to the applicable Franchised Business under the applicable Franchise Agreement, or is otherwise in competition with the business of the applicable Neighborly Franchisor or applicable Neighborly Franchisor's franchisees that engages in the distribution of similar products, services and/or equipment and that is located (a) anywhere, while the applicable Franchise Agreement is in effect or (b) (i) within the territory specified on the Data Sheet to the applicable Franchise Agreement, (ii) within a 35-mile radius of the outer boundary of such territory, or (iii) inside the territory of another business operating under the applicable Neighborly Franchisors' Marks, in each case during a period of two (2) years commencing with the earlier of the termination of the applicable Franchise Agreement or the date on which you cease to be associated with Franchisee, whether because of a termination of an employment arrangement or otherwise, which period shall be extended by any period of non-compliance.
The definition of Competitive Business does not include any business that derives 80% or more (no less than 80%) of its revenue from servicing commercial, and not residential, customers.
Source: Item 23 — Receipts (FDD pages 92–433)
What This Means (2025 FDD)
According to the 2025 Precision Door Service FDD, franchisees are subject to a non-compete covenant that restricts their involvement in similar businesses. While the franchise agreement is in effect, the non-compete applies anywhere. After the franchise agreement terminates or the franchisee ceases association with the Precision Door Service, the non-compete extends for a period of two years.
During this two-year period, the non-compete restricts the franchisee from engaging in a Competitive Business (defined as a business similar to the Precision Door Service franchise) within (i) the territory specified in the Franchise Agreement's Data Sheet, (ii) within a 35-mile radius of the outer boundary of such territory, or (iii) inside the territory of another business operating under the Neighborly Franchisors' Marks. The two-year period is extended by any period of non-compliance.
However, 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. This means a former Precision Door Service franchisee could operate a similar business focused primarily on commercial clients without violating the non-compete agreement.