Franchise Transactions & Litigation | Shin Law Office
The Hidden Restriction Most McLean Franchisees Miss
When reviewing franchise agreements for McLean and Fairfax County clients, I often find one clause that causes the most trouble later: the non-compete and post-agreement restriction.
It’s the fine print that dictates what you can and can’t do after your franchise ends.
Many franchisees only realize the impact when they try to sell their business, open a new one, or simply move on.
By then, it’s too late.
If you’re considering a franchise in McLean, you need to understand these restrictions before signing.
What Is a Franchise Non-Compete Clause?
A non-compete clause prevents you from running a similar business that competes with the franchisor’s brand during and after your franchise term. It can restrict:
- Location: usually within a certain radius (often 10 to 25 miles).
- Duration: often 1 to 2 years after termination.
- Business Type: covering any business “substantially similar” to the franchise.
On paper, these terms seem reasonable but in practice, many are drafted so broadly that they could ban you from operating any business in your industry for years.
How Overly Broad Clauses Trap Franchisees
I’ve represented franchise owners who thought they could pivot to a new concept after ending their franchise, only to be threatened with lawsuits.
Examples include:
- A restaurant franchisee who couldn’t open any eatery within 15 miles, even under a new name.
- A fitness studio owner was barred from teaching private classes because they were considered “competitive.”
If you sign without narrowing the scope, you’re giving away your right to work in your own trade.
Key Points to Negotiate Before Signing
Before you agree to a franchise in McLean or Fairfax County, focus on four key areas:
-
Geographic Scope
Limit the non-compete to the immediate market area, not an entire county or state. “Reasonable” usually means the protected territory plus a short buffer zone. -
Time Duration
One year is typical. Anything longer than 24 months can raise fairness and enforceability issues under Virginia law. -
Business Type Definition
Clarify precisely what “competitive” means. If you plan to stay in the same industry later, specify what activities are excluded. -
Termination and Transfer Exceptions
If your franchise ends involuntarily—or you sell to an approved buyer—the clause should expire immediately.
Virginia Law on Non-Competes
Virginia courts generally enforce non-competes only if they’re narrowly tailored to protect legitimate business interests.
Clauses that are overly broad in scope, geography, or duration are often struck down.
That means you have leverage.
If a franchisor’s restriction is too sweeping, it may not survive a legal challenge, but it’s far cheaper to negotiate limits before signing than to fight in court later.
Post-Term Obligations to Watch
Non-compete clauses aren’t the only restrictions to review. Many franchise agreements also include:
- Non-solicitation clauses ban you from hiring former employees or serving past customers.
- Confidentiality clauses that last indefinitely.
- De-branding requirements require the removal of all logos, equipment, and inventory within days.
I always ensure these post-term obligations are practical, time-limited, and clearly written.
Final Thoughts: Protect Your Right to Move Forward
Franchise agreements are designed to protect the brand, but your goal is to protect your future.
Before signing, understand what freedoms you’ll give up when the contract ends.
As a franchise and business attorney serving McLean and Northern Virginia, I review and negotiate franchise agreements to ensure my clients keep the right to earn a living after their franchise ends.
If you’re starting or renewing a franchise, let’s make sure your non-compete and post-term restrictions work for you, not against you.
Schedule a confidential consultation today.
Anthony I. Shin, Esq. | Principal Attorney | Shin Law Office
