During the term of the Spray Net franchise, who is subject to the non-competition covenants?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| o. | Franchisor's option to purchase Franchisee's business | Section 16(H) | Upon expiration or termination of the Franchise Agreement, we have the option to purchase your assets at net depreciated book value. |
| p. | Franchisee's death or disability | Section 13(B) | You will have a period of 180 days to find a suitable legal representative that we approve to continue the operation of your Franchised Business, provided that person completes our Initial Training Program and signs our then-current franchise agreement for the remainder of your term. During this 180-day period, we may step in and operate the Franchised Business on your behalf and pay ourselves a reasonable amount to reimburse our costs associated with this operation on your behalf. We are not under any obligation to step in and operate your business during this period. |
| q. | Non-competition covenants during the term of the franchise | Section 14(A) | Neither you, your principals, guarantors, owners or Designated Managers, nor any immediate family member of you, your principals, guarantors, owners or Designated Managers, may: (i) own, operate, or otherwise be involved with, Competing Business (as defined in the Franchise Agreement); (ii) employ or seek to employ any of employees or us, our affiliates or any other System franchisee or induce such persons to leave their employment; or (iii) divert, or attempt to divert, any prospective customer to a Competing Business. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–62)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, several parties are subject to non-competition covenants during the term of the franchise agreement. These parties include the franchisee, their principals, guarantors, owners, and Designated Managers. Additionally, the non-competition covenants extend to any immediate family member of the franchisee, their principals, guarantors, owners, or Designated Managers.
These non-competition covenants restrict these individuals and entities from engaging in certain activities. Specifically, they are prohibited from owning, operating, or being otherwise involved with a Competing Business, as defined in the Franchise Agreement. They are also barred from employing or seeking to employ any employees of Spray Net, its affiliates, or any other System franchisee, or from inducing such persons to leave their employment. Furthermore, they cannot divert, or attempt to divert, any prospective customer to a Competing Business.
For a prospective Spray Net franchisee, this means that not only are they restricted from engaging in competitive activities during the franchise term, but these restrictions also extend to key individuals associated with the franchise and their immediate family members. This is a fairly standard practice in franchising to protect the franchisor's business model and customer base. Franchisees should carefully review the definition of "Competing Business" in the Franchise Agreement to fully understand the scope of these restrictions.