Is a Carbones Pizzeria franchisee allowed to own a competing business during the term of the agreement?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
ee may deliver outside of its Franchisee Territory into areas that are not in a franchisee territory of another Carbone's Pizza franchisee, but if Franchisor grants a franchise territory which includes any such area, Franchisee shall immediately cease delivery activities in such area. e
4. Covenant Not to Compete; Covenant as to Trade Secrets.
- a. Franchisee acknowledges Franchisor must be protected against the potential for unfair competition by Franchisee's use of Franchisor's training, assistance and trade secrets in direct competition with Franchisor or its franchisees. Franchisee therefore agrees that it shall not:
- (1) During the term of this Agreement, either directly or indirectly: (a) operate, own, manage, or be employed by or consult with, any Competing Business other than one operated under a valid franchise agreement with Franchisor, or any business or venture that is granting franchises or licenses for the operation of a Competing Business; or (b) divert or attempt to divert any customer or potential customer to any competitor of the Carbone System.
- (2) For two (2) years following the termination or assignment of this Agreement, either directly or indirectly, operate, own, manage, be employed by, lease space to, lend money to, or consult with, any Competing Business, other than one operated under a valid franchise agreement with Franchisor, or any business or venture that is granting franchises or licenses for the operation of a Competing Business, that is located or doing business in the Restricted Area.
- b. In the event of the violation of Section 4.a.(2) by Franchisee, the period of time Franchisee shall be required to abide by the breached obligation shall be extended to a period of two (2) years after Franchisee is no longer in breach of such obligation.
- c. Franchisee further agrees that at no time shall it or any of its owners or employees, use any Confidential Information (as defined below) directly or indirectly, except as necessary for the proper operation of the Franchise pursuant to this Agreement. For the
- purposes of this Section, "use" means to use directly or indirectly, either as an individual or as a member of, consultant to, or investor in a joint venture, partnership, limited partnership, association or other entity, or to use as an officer, director, employee, consultant, or shareholder of any corporation or other entity.
- d. Franchisee acknowledges and agrees that Franchisor's remedy at law is inadequate and that in the event of any breach or threatened breach of the provisions of this Section Franchisor shall be entitled to temporary and final injunctive relief in addition to any other relief allowed by law.
5. Franchise Fees; Royalties.
- a. Franchisee shall pay to Franchisor an initial fee of Twenty-five Thousand Dollars ($25,000.00) (the "Franchise Fee"), payable in full upon the execution of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, a franchisee is generally prohibited from operating or being involved with a competing business during the term of the franchise agreement. Specifically, the franchisee cannot directly or indirectly operate, own, manage, be employed by, or consult with any "Competing Business," which is defined as any eat-in, take-out, or combination restaurant that serves pizza. The only exception to this is if the competing business is operated under a valid franchise agreement with Carbones Pizzeria itself. This restriction also extends to businesses or ventures that grant franchises or licenses for the operation of a Competing Business.
This non-compete clause is designed to protect Carbones Pizzeria's training, assistance, and trade secrets from being used to benefit a competitor. The agreement also prevents franchisees from diverting customers to competitors of the Carbone System. The FDD specifies that "use" of confidential information includes direct or indirect use as an individual or as a member of, consultant to, or investor in a joint venture, partnership, limited partnership, association or other entity, or to use as an officer, director, employee, consultant, or shareholder of any corporation or other entity.
After the franchise agreement terminates or is assigned, the franchisee is further restricted from involvement with a Competing Business for two years. This restriction applies within the "Restricted Area," defined as the Franchisee Territory, a 25-mile radius from the Franchisee Territory, and a 5-mile radius from any other restaurant or facility operated under the Carbones Pizzeria name. If a franchisee violates this post-term non-compete obligation, the period of restriction will be extended for two years after the breach ceases. Carbones Pizzeria emphasizes that a breach of these non-compete provisions would cause irreparable harm and entitles them to injunctive relief in addition to any other legal remedies.