What is Spray Net's recourse if a franchisee threatens to breach the non-compete agreement?
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, there are non-compete clauses in place that restrict a franchisee's activities after the agreement's term. Specifically, for two years after the expiration, nonrenewal, transfer, or termination of the agreement, the franchisee (including their principals, owners, guarantors, and immediate family members) cannot be involved with any business that competes with Spray Net by offering or granting licenses or franchises, or establishing joint ventures for a Competing Business. This restriction applies regardless of the cause of termination.
The geographic scope of this non-compete extends to any location where Spray Net can demonstrate it has offered or sold franchises as of the termination or expiration date. Furthermore, the franchisee is prohibited from owning, maintaining, engaging in, or being employed by any other Competing Business within the Designated Territory, within a 50-mile radius of the Designated Territory, within a 50-mile radius of any Spray-Net franchised business that is open and operating, or within a 50-mile radius of any other designated territory granted by Spray Net, regardless of whether a franchised business is operating there.
The FDD excerpt does not explicitly state Spray Net's recourse if a franchisee threatens to breach the non-compete agreement. It only defines the restrictions and scope of the non-compete obligations. To fully understand Spray Net's recourse, a prospective franchisee should inquire about the specific legal actions or remedies Spray Net may pursue, such as seeking injunctive relief or monetary damages, in the event of a threatened or actual breach of the non-compete agreement. It is also important to note that in Minnesota, the franchisee cannot consent to Spray Net obtaining injunctive relief; however, Spray Net may seek it, and a court will determine if a bond is required.