Does a non-compete survive a franchise transfer?

Non-competes in franchising do a different job from non-competes in an ordinary business sale. They protect the system and the territory, not only the goodwill passing between seller and buyer — which is why the franchisor, not just the buyer, cares whether they hold.

What the seller is restricted from doing

A post-term covenant typically stops the departing franchisee operating a competing business within a set distance of the location, and sometimes of any location in the system, for a period after exit. For a buyer, that is protection worth verifying: without it, the person who knows every customer by name is free to reopen nearby.

What the buyer becomes restricted from doing

The covenant you sign can constrain plans you have not made yet — opening an unrelated business in the same sector, investing in a competitor, or in multi-unit systems acquiring a location from a different brand. Read it as a limit on your own future, because that is what it is.

Radius clauses are a separate restriction

A radius clause limits where a competing location may open relative to this one, and it can bind the franchisor as well as you. It interacts with territory and encroachment rights, and the combination determines whether you have genuine protection from a new location opening nearby or merely the appearance of it.

Enforceability is not the same as presence

Canadian courts scrutinise restrictive covenants and will not enforce one broader than reasonably necessary — but a buyer should not plan on a clause failing. Assume the covenant you sign binds you, and assume the seller’s may need enforcing before it protects you.