Under what circumstances can a Beggars Pizza franchisee be released from the post-term covenant?
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 Beggars Pizza's 2025 Franchise Disclosure Document, a franchisee is subject to a post-term covenant, which restricts their activities after the franchise agreement ends. However, this covenant can be waived if Beggars Pizza provides written approval.
Specifically, the post-term covenant lasts for two years, beginning from the date of a permitted transfer under Section 14, the expiration of the agreement, the termination of the agreement (regardless of the reason), or a final order from an arbitrator or court. During this period, the franchisee cannot own, operate, or be involved with any business that sells pizza or similar food items that compete with Beggars Pizza. This restriction applies within the franchisee's territory, within 10 miles of the approved location of their former Beggars Pizza restaurant, or within 10 miles of any other Beggars Pizza location.
However, the post-term covenant does not prevent a franchisee from operating another Beggars Pizza franchise under a separate written agreement with the company. This means that if a franchisee continues to operate a Beggars Pizza restaurant under a new franchise agreement, the post-term covenant does not apply to that new business. Therefore, the only explicit way to be released from the post-term covenant is to obtain written approval from Beggars Pizza.