Does the Precision Door Service franchise agreement allow for exceptions to the covenant not to compete?
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, the covenant not to compete has some exceptions. The franchise agreement states that unless Precision Door Service approves otherwise in writing, franchisees cannot directly or indirectly participate in any business that is the same as or similar to the Precision Door Service business. This includes involvement as an owner, operator, employee, or shareholder in a competing entity. This restriction applies both during the term of the franchise agreement and for two years after termination or disassociation. The restricted area includes the franchisee's territory, a 35-mile radius around it, and other franchisees' territories.
However, the definition of a "Competitive Business" does not include businesses that derive 80% or more of their revenue from servicing commercial customers, rather than residential ones. This creates a carve-out allowing a former Precision Door Service franchisee to focus on commercial garage door services without violating the non-compete agreement.
Therefore, a Precision Door Service franchisee is not held to the non-compete if they receive written approval from Precision Door Service or if their business focuses primarily on commercial clients. This provides some flexibility for franchisees seeking to transition their business focus or pursue other opportunities after leaving the Precision Door Service system.