Are in-term and post-term covenants against competition covered by the Spray Net Personal Guaranty?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the grant by Franchisor to the Franchisee as herein provided, each of you hereby agree, in consideration of benefits received and to be received by each of you, jointly and severally, and for yourselves, your heirs, legal representatives and assigns, to be firmly bound by all of the terms, provisions and conditions of the foregoing SPRAY-NET Franchise Agreement, and any other agreement between Franchisee and Franchisor and/or its affiliates, and do hereby unconditionally guarantee the full and timely performance by Franchisee of each and every obligation of Franchisee under the aforesaid Franchise Agreement or other agreement between Franchisor and Franchisee, including, without limitation: (i) any indebtedness of Franchisee arising under or by virtue of the aforesaid Franchise Agreement; (ii) the prohibition of any change in the percentage of Franchisee owned, directly or indirectly, by any person, without first obtaining the written consent of Franchisor prior to said proposed transfer as set forth in the Franchise Agreement; (iii) those obligations related to confidentiality, non-disclosure and indemnification; and (iv) the in-term and post-term covenants against competition, as well as all other restrictive covenants set forth in the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the Personal Guaranty signed by the franchisee's owners/principals/members/shareholders/managers/partners and their respective spouses includes the guarantee of the franchisee's obligations under the Franchise Agreement. This guarantee extends to the in-term and post-term covenants against competition, as well as all other restrictive covenants outlined in the Franchise Agreement. This means that the individuals signing the Personal Guaranty are personally liable for the franchisee's adherence to these competitive restrictions.
The in-term covenant restricts the franchisee from being involved with any Competing Business during the term of the Franchise Agreement. The post-term covenant extends for two years after the agreement's expiration, nonrenewal, transfer, or termination. During this period, the franchisee and related parties are restricted from involvement with businesses that compete with Spray Net, specifically concerning licensing or franchising of a Competing Business, within certain geographic areas. These areas include the Designated Territory, a 50-mile radius around it, and a 50-mile radius around any other Spray-Net franchised business.
This aspect of the Spray Net franchise agreement is significant because it holds individuals personally accountable for the business's compliance with non-compete obligations. Potential franchisees should carefully consider the implications of the Personal Guaranty, particularly the scope and duration of the in-term and post-term covenants against competition. They should also be aware of the geographic restrictions imposed after the termination of the franchise agreement, as these could limit their future business opportunities. It is advisable to seek legal counsel to fully understand the obligations and potential liabilities associated with the Personal Guaranty before signing the Franchise Agreement.