Under what circumstances are the non-compete restrictions in Sections 17.2.2 and 17.3 not applicable to a Beggars Pizza franchisee?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
- 17.4 No Application to Equity Securities. Section 17.2.2 and Section 17.3 will not apply to ownership by Franchisee of a less than five percent (5%) beneficial interest in the outstanding equity securities of any corporation which has securities registered under the Securities Exchange Act of 1934.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the non-compete restrictions outlined in Sections 17.2.2 and 17.3 of the franchise agreement do not apply under specific circumstances. These exceptions are designed to allow franchisees certain freedoms without violating the agreement.
Specifically, these non-compete restrictions do not apply if a franchisee operates another business under the Beggars Pizza System, provided that the franchisor has granted a written franchise agreement for that business. This means a franchisee can own and operate multiple Beggars Pizza locations without violating the non-compete clauses related to owning competing pizza businesses. Additionally, the non-compete clauses do not apply if a franchisee owns less than a five percent beneficial interest in the equity securities of a corporation registered under the Securities Exchange Act of 1934. This allows franchisees to invest in publicly traded companies, even those that might have some connection to the pizza or food industry, as long as their stake remains below the 5% threshold.
These exceptions provide Beggars Pizza franchisees with some flexibility in their business and investment activities. However, it is important for prospective franchisees to fully understand the scope and limitations of these exceptions and to seek legal counsel to ensure compliance with the franchise agreement.