After the termination of a Spray Net franchise agreement, what activities are franchisees prohibited from engaging in with a Competing Business within their Designated Territory?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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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, for two years after the termination of the franchise agreement, franchisees are restricted from involvement with any business that competes with Spray Net. This restriction applies to the franchisee, their principals, owners, guarantors, and their immediate family members. Involvement is defined broadly, including direct or indirect participation, whether for themselves or in conjunction with others.
Specifically, within the franchisee's Designated Territory, as well as within a 50-mile radius of that territory, any Spray-Net franchised business, or any other designated territory granted by Spray-Net, the franchisee is prohibited from owning, maintaining, engaging in, or being employed as an officer, director, or principal of a Competing Business. They also cannot lend money to, extend credit to, or lease/sublease space to a Competing Business. Furthermore, having any interest in or involvement with a Competing Business is also prohibited.
This non-compete clause is in effect regardless of the reason for termination, whether it be expiration, non-renewal, transfer, or termination of the agreement. The restrictions are designed to protect Spray Net's market presence and prevent former franchisees from leveraging their knowledge and resources gained during the franchise agreement to compete against the brand. Prospective franchisees should carefully consider these post-termination restrictions and how they might impact their future business opportunities.