Franchise Non-Compete After Selling: What to Check Before You Sell
If you plan to buy another franchise or open something nearby once this one sells, your franchise non-compete is worth reading before you list, not after a buyer is at the table. Selling does not by itself tell you whether the clause still binds you. Your franchise agreement does, and Item 17 of your Franchise Disclosure Document (FDD) shows where to look. The FTC's non-compete rule does not change that for a franchisee.
Does selling my franchise end my non-compete?
Do not assume it does. Whether a sale ends, triggers or leaves untouched a non-compete is written in your own agreement, and we found no general rule that answers it for you.
The public text says one thing on this. Item 17 of the FDD has a row for non-competition covenants during the term of the franchise and a separate row for non-competition covenants after the franchise is terminated or expires. The second row's label names termination and expiration. It does not name a sale. So read how your agreement treats a transfer, and what it says happens to your covenants when the buyer takes over. We found no source on how often a sale sets off the post-term covenant, so we do not guess.
Where do I find my non-compete in the paperwork?
In two places: the franchise agreement you signed, and the Item 17 table in your FDD. Item 17 is the franchisor's summary, in a table with a row for each topic. The rows that matter here are (q), "Non-competition covenants during the term of the franchise," and (r), "Non-competition covenants after the franchise is terminated or expires" (16 CFR 436.5(q), read on Cornell Law School's Legal Information Institute, 2026-10-26). Read the clause itself, not only the summary row.
Look at three things in the clause: which activities it restricts, in what area, and for how long. Those three decide what you are free to do next.
The same Item 17 table holds the rows on your franchisor's approval of a buyer, rows (k), (l) and (m). Our article on franchisor approval covers what the franchisor reviews. If you are still deciding whether to sell at all, getting out of a franchise agreement sets out the options.
Will a court enforce a franchise non-compete?
It depends on your state's law and on the exact wording of the clause. We found no primary source we could read that gives a general answer, so we do not offer one.
How your state's courts treat a restriction that goes too far is a question for a franchise attorney reading your agreement.
Does the FTC's non-compete rule cover a franchise owner?
No. The FTC's own rule page says the Noncompete Rule "is not in effect and it is not enforceable." It also says the rule's definition of "worker" "does not include a franchisee in the context of a franchisee-franchisor relationship" (FTC, Non-Compete Rule page, read 2026-10-26).
The page gives the history. "On August 20, 2024, a district court issued an order stopping the FTC from enforcing the rule." "On September 5, 2025, the FTC took steps to dismiss its appeal in the Fifth Circuit." It also lists a February 12, 2026 Federal Register notice whose title ends "Removal of the Non-Compete Rule To Conform These Rules to Federal Court Decisions."
So a headline about the FTC and non-competes does not change what your franchise agreement says. State law is a separate question for your attorney.
What if I own more than one unit?
Ask before you list, because a clause written around a whole portfolio may not shrink when you sell one location. Whether it narrows to match what you sold or stays fully in place is a question about your development agreement and your franchise agreements. We found no source that answers it in general.
Ask your franchisor in writing how the covenants apply to each unit you plan to sell, and whether it reads them unit by unit or across the whole portfolio.
What should I do about it before I sell?
Start with three things you control: pull the clause and the Item 17 rows, write down what you want to do after the sale, and ask your franchisor in writing how it treats the covenants on a transfer.
Then take all three to your franchise attorney, early. What the clause allows can shape which buyer you accept, how you structure the sale, and what you plan next, so it belongs in the first conversation and not the last one. Your attorney is the right person to read your specific agreement. We are not.
A free Opinion of Value shows you the worth side of a sale and commits you to nothing. It is a personal valuation page with a custom video walkthrough recorded by a senior advisor, free and with no card on file. Request your free Opinion of Value when you want a number to plan around. If you decide to sell, our sell a franchise page shows how we work with owners.
Frequently asked questions
Read what your non-compete restricts, where, and for how long. Those are three separate terms in the clause, and each one decides what you are free to buy or open next. Have your franchise attorney read them against the concept you have in mind before you list.
A buyer can ask for one in the purchase agreement, which is a separate document from your franchise agreement. We found no source on how often buyers do. Ask your attorney to read the two together.
You can ask. We found no source on how often a franchisor agrees. Ask in writing, and have your attorney read any reply before you rely on it.