After the Spray Net Franchise Agreement expires or is terminated, are parties prohibited from operating a business in a designated territory even if a franchised business is not open there?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| o. | Franchisor's option to purchase Franchisee's business | Section 16(H) | Upon expiration or termination of the Franchise Agreement, we have the option to purchase your assets at net depreciated book value. |
| p. | Franchisee's death or disability | Section 13(B) | You will have a period of 180 days to find a suitable legal representative that we approve to continue the operation of your Franchised Business, provided that person completes our Initial Training Program and signs our then-current franchise agreement for the remainder of your term. During this 180-day period, we may step in and operate the Franchised Business on your behalf and pay ourselves a reasonable amount to reimburse our costs associated with this operation on your behalf. We are not under any obligation to step in and operate your business during this period. |
| q. | Non-competition covenants during the term of the franchise | Section 14(A) | Neither you, your principals, guarantors, owners or Designated Managers, nor any immediate family member of you, your principals, guarantors, owners or Designated Managers, may: (i) own, operate, or otherwise be involved with, Competing Business (as defined in the Franchise Agreement); (ii) employ or seek to employ any of employees or us, our affiliates or any other System franchisee or induce such persons to leave their employment; or (iii) divert, or attempt to divert, any prospective customer to a Competing Business. |
| r. | Non-competition covenants after the franchise is terminated or expires | Section 14(B)(1) | For a period of two (2) years after the termination/expiration/transfer of your Franchise Agreement, neither you, your principals, guarantors, owners, Designated Managers, nor any immediate family member of you, your principals, guarantors, owners, Designated Managers, may own, operate or otherwise be involved with any business that competes with us and is involved in the licensing or franchising, or establishing of joint ventures for the operation, of any Competing Business. |
| Section 14B)(2) | For | ||
| a | |||
| period | |||
| of | |||
| two | |||
| (2) | |||
| years | |||
| after | |||
| the | |||
| termination/expiration/transfer of your Franchise Agreement, | |||
| neither you, your principals, guarantors, owners, Designated | |||
| Managers, nor any immediate family member of you, your | |||
| principals, guarantors, owners, Designated Managers, may own, | |||
| operate or otherwise be involved with and Competing Business: | |||
| (i) within your Designated Territory; (ii) within a 50-mile radius | |||
| of your Designated Territory; (iii) within a 50-mile radius of any | |||
| franchised business that is open and operating as of the date your | |||
| Franchise Agreement expires and/or is terminated; (iv) within a | |||
| 50-mile radius of a |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–62)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, after the franchise agreement is terminated or expires, there are non-competition covenants in place. For a period of two years after the termination, expiration, or transfer of the Franchise Agreement, the franchisee, their principals, guarantors, owners, designated managers, or any immediate family member are restricted from owning, operating, or being involved with any business that competes with Spray Net. This includes involvement in licensing or franchising, or establishing joint ventures for the operation of any competing business.
Specifically, these restrictions apply within the franchisee's designated territory, within a 50-mile radius of that territory, and within a 50-mile radius of any franchised Spray Net business that is open and operating as of the date the Franchise Agreement expires or is terminated. Additionally, the non-compete extends to a 50-mile radius of any other designated territory that Spray Net or its affiliates have granted in connection with any franchised business.
This means that even if a Spray Net franchise is not currently operating within a specific designated territory, the franchisee is still prohibited from operating a competing business in that territory for two years after the termination or expiration of their franchise agreement. This restriction is designed to protect Spray Net's market share and prevent former franchisees from directly competing with existing or future Spray Net franchisees.