Which provisions of the Red Wagon Club franchise agreement survive the expiration or termination of the agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
18.D. CONTINUING OBLIGATIONS.
All of Franchisor's and Franchisee's (and Franchisee's owner(s)') obligations which expressly or by their nature survive this Agreement's expiration or termination will continue in full force and effect
subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.
18.E. POST-TERM COVENANT NOT TO COMPETE.
Upon expiration or termination of this Agreement for any reason, neither Franchisee, its affiliates, nor any owner nor any member of the immediate family of Franchisee or any owner, shall directly or indirectly for a period of twenty-four (24) months commencing on the effective date of such termination or expiration, or the date on which Franchisee ceases to operate Franchisee's RWC Business, whichever is later:
- (1) have any interest as a disclosed or beneficial owner in any Competitive Business located or operating:
- (a) at the Office, or
- (b) within the Territory, or
- (c) within a twenty-five (25) mile radius of the protected territory of any other Business in operation or under development on the effective date of termination or expiration of this Agreement;
- (2) perform services as a director, officer, manager, employee, consultant, lessor, representative, agent, or otherwise for any Competitive Business located or operating:
- (a) at the Office, or
- (b) within the Territory, or
- (c) within a twenty-five (25) mile radius of the protected territory of any other Business in operation or under development on the effective date of termination or expiration of this Agreement; or
- (3) divert or attempt to divert any business or any customers of any Businesses to any Competitive Business.
The restrictions of Subparagraph (1) of this Section 18.E. will not be applicable to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market and quoted on a national inter-dealer quotation system that represent less than three percent (3%) of the number of shares of that class of securities issued and outstanding.
18.F. WEBSITE.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, several obligations continue even after the franchise agreement expires or is terminated. All obligations of both the franchisor and franchisee that are explicitly stated to survive, or by their nature would survive, remain in effect until fully satisfied or until they naturally expire.
Specifically, upon expiration or termination, the franchisee must remove all Red Wagon Club marks from their office, return proprietary materials like the Operations Manual, and destroy or return all items related to the RWC Business. The franchisee cannot identify themselves as a current or former Red Wagon Club business, use any marks or similar indicia, or use any trade names suggesting a connection with Red Wagon Club, except for other Red Wagon Club businesses they own and operate.
Additionally, the franchisee must cancel or assign any assumed name registrations related to their use of Red Wagon Club marks, cease using contact identifiers or online presence associated with the brand (transferring control to the franchisor), comply with laws regarding the closure of the RWC Business, and stop using any email addresses associated with Red Wagon Club's domain. The franchisee must also provide all agreements and data pertaining to existing and potential members, pay any applicable damages, adhere to non-disparagement and non-competition provisions, and provide evidence of compliance with these obligations within 30 days of termination or expiration.
Furthermore, for a period of 24 months after termination or expiration, the franchisee is restricted from having any interest in or performing services for a Competitive Business within the Office, the Territory, or a 25-mile radius of any other Red Wagon Club business. These continuing obligations are typical in franchise agreements to protect the brand and customer relationships after a franchise ends.