What is the geographic scope of the non-compete covenant for Spray Net franchisees after the Franchise Agreement is terminated or expires?
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, the non-compete agreement has two main geographic restrictions that apply for two years after the franchise agreement expires or is terminated. The first restriction prevents a former franchisee (or their close family members/business partners) from being involved with any business that offers or grants licenses or franchises, or establishes joint ventures, for the ownership or operation of a business that competes with Spray Net. This restriction applies in any location where Spray Net can demonstrate it has offered or sold franchises as of the date the agreement is terminated or expires. This means the restriction could extend across a wide geographic area, potentially nationwide, if Spray Net has offered franchises in many locations.
The second restriction focuses on preventing the former franchisee from directly competing with a Spray Net business. It prohibits the franchisee from owning, maintaining, engaging in, or being involved with any other competing business within several defined areas. These areas include the franchisee's original Designated Territory, a 50-mile radius around that 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 that Spray Net has granted, regardless of whether a Spray Net business is currently operating in that other territory.
These non-compete terms are fairly standard in franchising, designed to protect Spray Net's business model and market presence. However, the breadth of these restrictions—particularly the one tied to any location where Spray Net has offered franchises—could significantly limit a former franchisee's ability to start a similar business. A prospective franchisee should carefully consider these limitations and how they might impact their future career options if they decide to leave the Spray Net system. It would be prudent to seek legal advice to fully understand the enforceability and implications of these non-compete clauses in their specific jurisdiction.