If Spray Net terminates the agreement for cause, what representation is the franchisee prohibited from making?
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.
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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)
The 2025 Spray Net Franchise Disclosure Document outlines restrictions on a franchisee's activities after the termination of the franchise agreement, regardless of the reason for termination. Specifically, for two years following the termination of the agreement, the franchisee is restricted from involvement in 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 extends to the franchisee, their principals, owners, guarantors, and their immediate family members. The geographic scope of this covenant covers any location where Spray Net has offered or sold franchises as of the termination date.
Furthermore, the franchisee is prohibited from owning, maintaining, or being involved with any competing business within their Designated Territory, within a 50-mile radius of their Designated Territory, within a 50-mile radius of any Spray-Net franchised business, or within a 50-mile radius of any other designated territory granted by Spray Net. These restrictions aim to protect Spray Net's market and franchise system by preventing former franchisees from leveraging their knowledge and experience to compete against the brand shortly after their departure.