Does the Spray Net franchisee have to comply with restrictive covenants after the agreement terminates?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
B. After the Term of this Agreement.
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- For a period of two (2) years after the expiration and nonrenewal, transfer or termination of this Agreement, regardless of the cause, neither Franchisee, its principals, owners and guarantors, nor any member of the immediate family of Franchisee, its principals, owners or guarantors, may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation, be involved with any business that competes in whole or in part with Franchisor by offering or granting licenses or franchises, or establishing joint ventures, for the ownership or operation of a Competing Business. The geographic scope of the covenant contained in this Section is any location where Franchisor can demonstrate it has offered or sold franchises as of the date this Agreement is terminated or expires.
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- For a period of two (2) years after the expiration and nonrenewal, transfer or termination of this Agreement, regardless of the cause, neither Franchisee, its principals, owners and guarantors, nor any member of the immediate family of Franchisee, its principals, owners or guarantors, may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation:
- a. Own, maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend credit to, lease/sublease space to, or have any interest in or involvement with any other Competing Business:
- i. within the Designated Territory;
- ii. within a fifty (50) mile radius of the Designated Territory;
- iii. within a fifty (50) mile radius of any Spray-Net franchised business
that is open and operating as of the date this Agreement expires and/or is terminated; or
iv. within a fifty (50) mile radius of any other designated territory that has been granted by Franchisor or its affiliates in connection with a Spray-Net franchised business as of the date this Agreement expires and/or is terminated, regardless of whether a Franchised Business is open and operating in that designated territory; or
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, franchisees are subject to certain restrictive covenants after the termination of the franchise agreement. For a period of two years after the agreement's expiration, nonrenewal, transfer, or termination, the franchisee, their principals, owners, guarantors, and their immediate family members are restricted from involvement with any business that competes with Spray Net. This includes offering or granting licenses or franchises, or establishing joint ventures for a Competing Business. This restriction applies to any location where Spray Net has offered or sold franchises as of the termination or expiration date.
Additionally, for the same two-year period, these individuals are prohibited from owning, maintaining, engaging in, or being employed by any other Competing Business within the Designated Territory. The restriction extends to a 50-mile radius of the Designated Territory, a 50-mile radius of any Spray-Net franchised business that is open and operating, and a 50-mile radius of any other designated territory granted by Spray Net, regardless of whether a franchised business is operating there.
These post-term restrictive covenants are designed to protect Spray Net's business interests and prevent former franchisees from using confidential information or relationships gained during their franchise term to compete against the brand. Prospective franchisees should carefully consider the scope and duration of these restrictions, as they could significantly limit their future business opportunities after leaving the Spray Net system. It is advisable to seek legal counsel to fully understand the implications of these covenants before entering into a franchise agreement.