Covenants not to compete prohibit franchisees from competing with the franchisor during a specific time and in a specified area after the termination of the franchise.

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Covenants not to compete are a common clause in franchise agreements to prevent franchisees from using the skills, knowledge and resources gained from the business to compete with the franchisor. These clauses typically restrict the franchisee from operating a similar business in the same geographical area for a certain period of time after the termination of the franchise agreement.

Covenants Not to Compete Prohibit Franchisees from Competing with the Franchisor