Why does the Antioch Pizza Shop agreement include an in-term non-competition agreement?
Antioch_Pizza_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that we would be unable to protect the Confidential Information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information between you and us if you or your Owners were permitted to hold interests in any competitive businesses, as described below. You also acknowledge that we have entered into this Agreement with you in part in consideration of, and in reliance on, your agreement to deal exclusively with us. Therefore, during the term of this Agreement, neither you, nor any Owner, may, either directly or indirectly, for yourself or through, on behalf of, or in conjunction with, any person or legal entity, own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any business which offers products or services which are the same as, or similar to, those offered by Antioch Pizza Shop Restaurant (other than through a franchise agreement with Franchisor), or any entity which is granting franchises or licenses for any business which offers products or services which are the same as, or similar to, those offered by Antioch Pizza Shop Restaurants. (The ownership of five percent (5%) or less of a publicly traded Franchisor will not be deemed to be prohibited by this paragraph.) Further, during the term of this Agreement, you will not divert customers or business from any Antioch Pizza Shop Restaurants to any other business.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to the 2025 FDD, Antioch Pizza Shop includes an in-term non-competition agreement in its franchise agreement to protect its confidential information and encourage the free exchange of ideas and information between the franchisee and the franchisor. Antioch Pizza Shop requires franchisees to deal exclusively with them, and the agreement is made, in part, due to this reliance. This prevents franchisees and their owners from holding interests in competitive businesses during the term of the agreement.
Specifically, franchisees and their owners are prohibited from owning, maintaining, operating, engaging in, consulting with, or having any interest in businesses that offer products or services similar to those offered by Antioch Pizza Shop restaurants. This restriction applies whether the involvement is direct or indirect, for themselves or in conjunction with any other person or entity. An exception is made for ownership of five percent or less of a publicly traded franchisor.
Furthermore, franchisees are prohibited from diverting customers or business from any Antioch Pizza Shop restaurants to any other business during the term of the agreement. This ensures that franchisees remain committed to the success of the Antioch Pizza Shop system and do not use their access to confidential information or customer relationships to benefit competing ventures. This type of clause is standard practice in franchising to protect the brand and prevent franchisees from undermining the system they've invested in.