After the termination of a Spray Net franchise agreement, for how long are franchisees restricted from being involved with a competing business that offers or grants licenses or franchises?
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, following the termination, transfer, or non-renewal of the franchise agreement, franchisees face certain restrictions regarding involvement with competing businesses. Specifically, for a period of two years, the franchisee, their principals, owners, guarantors, and their immediate family members are prohibited from being involved with any business that competes with Spray Net by offering or granting licenses or franchises, or establishing joint ventures for the ownership or operation of a competing business. This restriction applies regardless of the cause of termination.
The geographic scope of this covenant extends to any location where Spray Net can demonstrate it has offered or sold franchises as of the date the agreement is terminated or expires. This means that the restriction is not limited to the franchisee's specific territory but could potentially cover a broader area where Spray Net has a presence.
In addition to the restriction on involvement with competing franchise systems, for the same two-year period, franchisees are also restricted from owning, maintaining, engaging in, or being employed by any other competing business within their designated territory, within a 50-mile radius of their designated territory, within a 50-mile radius of any Spray-Net franchised business, or within a 50-mile radius of any other designated territory granted by Spray Net. These non-compete clauses are typical in franchise agreements to protect the brand and its existing franchisees from unfair competition.