What section of the Spray Net franchise agreement outlines the in-term covenant not to compete?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or Franchisee's owners/principals violate any of the in-term covenant
not to compete or any of the other restrictive covenants set forth in Section 14 of this Agreement;
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If Franchisee misuses the Proprietary Marks or Confidential Information in any manner, or otherwise violates any provision of this Agreement related to the use of the Proprietary Marks, Confidential Information and any other confidential materials provided by Franchisor (including those provisions related to nondisclosure of the Manuals and other confidential materials that Franchisor loans to Franchisee);
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Item 23 discusses the in-term covenant not to compete. Specifically, it mentions that if a franchisee or their owners/principals violate the in-term covenant not to compete or any other restrictive covenants set forth in Section 14 of the agreement, it could lead to certain repercussions.
During the term of the Franchise Agreement and the Personal Guaranty, the franchisee and related parties are restricted from engaging in or having an interest in any competing business. This includes businesses that offer similar products or services related to painting, coating exteriors, or offering/granting licenses or franchises for competing businesses. However, this restriction does not apply to the franchisee's operation of a Spray Net franchise under a valid agreement or ownership of less than 2% of interests in a publicly traded company.
Additionally, franchisees are prohibited from employing or soliciting employees of Spray Net, its affiliates, or other franchisees. They also cannot divert business or customers to competitors or perform any actions that are harmful to the goodwill associated with Spray Net's proprietary marks or system. This ensures that franchisees remain committed to the Spray Net system and do not engage in activities that could undermine the brand or its network of franchisees.