What is the Spray Net franchisee prohibited from challenging regarding the System 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
b.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
Based on the 2025 Spray Net Franchise Disclosure Document, after the franchise agreement terminates, the franchisee is restricted from involvement with any business that competes with Spray Net by offering or granting licenses or franchises, or establishing joint ventures for the ownership or operation of a Competing Business for a period of two years. This restriction applies regardless of the cause of termination, whether it's due to expiration, non-renewal, or transfer.
This non-compete clause extends to the franchisee, their principals, owners, guarantors, and any member of their immediate family. The restriction covers a broad scope of activities, including owning, maintaining, engaging in, being employed by, lending money to, extending credit to, leasing space to, or having any interest in any other Competing Business.
The geographic scope of this restriction includes the Designated Territory, a 50-mile radius around the Designated Territory, a 50-mile radius around any Spray-Net franchised business that is open and operating, and a 50-mile radius around any other designated territory granted by Spray Net, regardless of whether a franchised business is operating there. This means a former Spray Net franchisee is significantly limited in their ability to start or be involved with a competing business in areas where Spray Net has a presence.