For how long does the post-term covenant apply to a former Beggars Pizza franchisee?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.3 Post-Term Covenants. Franchisee covenants that, except as otherwise approved in writing by Franchisor, Franchisee will not, for a continuous uninterrupted period of two (2) years commencing upon the date of (a) a transfer permitted under Section 14, (b) expiration of the Agreement, (c) termination of the Agreement regardless of the cause for termination, (d) a final order of a duly authorized arbitrator, panel of arbitrators, or a court of competent jurisdiction (after all appeals have been taken) with respect to any of the foregoing or with respect to enforcement of this Section 17.3, or (e) any or all of the foregoing, either directly or indirectly for itself, or through, on behalf of, or in conjunction with any person or legal entity, own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in (as owner or otherwise) any business that (a) offers or sells pizza, pizza products, Italian-style food, or other food items that are the same as or similar to the products being offered by the Restaurant under the System, and (b) is, or is intended to be, located at or within:
- 17.3.1 Franchisee's Territory;
- 17.3.2 Ten (10) miles of the Approved Location; or
- 17.3.3 Ten (10) miles of any business operating under the Proprietary Marks;
provided, however, that Section 17.2.2 and Section 17.3 will not apply to the operation by Franchisee of any business under the System that is franchised by Franchisor to Franchisee under a written franchise agreement.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Beggars Pizza Franchise Disclosure Document, a former franchisee is subject to a post-term covenant for a period of two years. This restriction begins from the date of a permitted transfer, the expiration of the Franchise Agreement, the termination of the agreement (regardless of the reason), a final order from an arbitrator or court, or any combination of these events.
During this two-year period, unless Beggars Pizza provides written approval otherwise, the former franchisee is prohibited from owning, maintaining, operating, engaging in, being employed by, providing assistance to, or having any ownership interest in any business that offers or sells pizza, pizza products, Italian-style food, or similar food items. This restriction applies to businesses located within the franchisee's former territory, within ten miles of the approved location of their former Beggars Pizza restaurant, or within ten miles of any other Beggars Pizza location.
However, these post-term covenants do not apply if the franchisee is operating another business under the Beggars Pizza system that is franchised to them under a written agreement. This means a franchisee can operate another Beggars Pizza restaurant without violating the post-term covenant. This non-compete agreement is fairly standard in the franchise industry to protect the brand and market share of the franchisor.