Does The Standardx franchise agreement contain a covenant not to compete during the term of the franchise?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| n. | Franchisor's right of first refusal to acquire franchisee's business | 1.5 and Exhibit C of Franchise Agreement | We only have right of first offer on transfers of the Hotel or a Controlling Ownership Interest in you if we and you sign Exhibit C. We will require Exhibit C only for certain markets that we determine are strategic to us. |
| o. | Franchisor's option to purchase franchisee's business | Not applicable | Not applicable. |
| p. | Death or disability of franchisee | 12.7 of Franchise Agreement | Upon death or incompetence of owner of a Controlling Ownership Interest in you or your controlling owner, representative must transfer to approved transferee within 6 months. |
| q. | Non-competition covenants during the term of the franchise | 4.2, 4.10 and 4.11 of Franchise Agreement | No covenant not to compete, but neither you nor Hotel management company may be a Competing Brand Owner. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 75–81)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the franchise agreement does not contain a covenant not to compete during the term of the franchise. However, neither the franchisee nor the Hotel management company is allowed to be a Competing Brand Owner, as detailed in Sections 4.2, 4.10, and 4.11 of the Franchise Agreement.
This means that while franchisees are not explicitly restricted from engaging in other business ventures generally, they are prohibited from owning or operating a competing hotel brand. This restriction aims to protect The Standardx's market position and brand integrity by preventing franchisees from directly supporting or benefiting from rival hotel chains.
For a prospective franchisee, this implies that while they may have flexibility to pursue other business interests, they must avoid any involvement with competing hotel brands. It is important for potential franchisees to carefully review Sections 4.2, 4.10, and 4.11 of The Standardx's Franchise Agreement to fully understand the scope and limitations of this restriction and ensure they do not inadvertently violate the terms of the agreement.