What post-term covenants must a Spray Net franchisee comply with after termination or expiration?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
cent (2%) legal or beneficial interest;
-
- Subject to and as permitted by applicable law, employ or seek to employ any person who is at that time employed by Franchisor, Franchisor's affiliates or any other System franchisee, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment thereat; or
-
- Divert, or attempt to divert, any prospective customer to a Competing Business in any manner.
B. After the Term of this Agreement.
-
- 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.
-
- 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. Subject to and as permitted by applicable law, solicit business from Clients of Franchisee's former Franchised Business or contact any of Franchisor's suppliers or vendors for any competitive business purpose, nor solicit any of Franchisor's other employees, or the employees of Franchisor's affiliates or any other System franchisee to discontinue employment.
- C. Intent and Enforcement. It is the parties' intent that the provisions of this Section 14 be judicially enforced to the fullest extent permissible under applicable law. Accordingly, the parties agree that any reduction in scope or modification of any part of the noncompetition provisions contained herein shall not render any other part unenforceable. In the event of the actual or threatened breach of this Section 14 by Franchisee, any of Franchisee's principals, or any member of the immediate family of Franchisee or Franchisee's principals, Franchisor shall be entitled to an injunction restraining such person from any such actual or threatened breach. Franchisee acknowledges that the covenants contained herein are necessary to protect the goodwill of the Franchised Business, other System franchisees, and the System.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, there are several post-term covenants that a franchisee must adhere to after the termination or expiration of their franchise agreement. These covenants primarily revolve around non-competition and the protection of Spray Net's business interests. For a period of two years, the franchisee, along with their principals, owners, guarantors, and immediate family members, are restricted from involvement with 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 applies to any location where Spray Net has offered or sold franchises as of the termination or expiration date.
Additionally, for the same two-year period, the franchisee and related parties are prohibited from owning, maintaining, or being employed by any competing business within the Designated Territory, a 50-mile radius of the Designated Territory, a 50-mile radius of any Spray-Net franchised business, or a 50-mile radius of any other designated territory granted by Spray Net. This aims to prevent former franchisees from leveraging their knowledge and experience gained during their time with Spray Net to directly compete against the brand.
Beyond non-competition, upon termination or expiration of the franchise agreement, the franchisee must disconnect the telephone number used for the franchised business at Spray Net's request, or transfer it to Spray Net. Franchisees must also remove all trade dress and physical characteristics indicating operation under the Spray Net system from the premises and vehicles. All materials bearing Spray Net's proprietary marks must be returned to Spray Net without cost. Finally, franchisees are obligated to pay any outstanding amounts owed to Spray Net or its approved suppliers within 10 days of termination or expiration.