What is the geographic scope of the non-compete covenant for a Spray Net franchisee after termination, regarding offering or granting licenses or franchises for a competing business?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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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.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, for two years after the franchise agreement expires, is not renewed, is transferred, or is terminated, the franchisee, their principals, owners, guarantors, or any immediate family member cannot be involved 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.
The geographic scope of this restriction applies to any location where Spray Net can demonstrate it has offered or sold franchises as of the date the Franchise Agreement is terminated or expires. This means that the non-compete extends to any area where Spray Net has actively marketed or sold franchises, regardless of whether a Spray Net franchise is currently operating in that location.
This post-term covenant specifically restricts the franchisee from enabling others to operate competing businesses through licensing or franchising within Spray Net's established market areas. This restriction is separate from, and in addition to, other non-compete clauses that prevent the franchisee from directly operating a competing business within a defined territory. A prospective franchisee should carefully consider the implications of this broad geographic scope, especially if they have future plans to develop or invest in similar businesses outside of their immediate territory after leaving the Spray Net system.