Is a Carbones Pizzeria franchisee allowed to be employed by 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. It is expressly understood and agreed by the parties that the Franchise Fee is and shall be fully earned by Franchisor upon the signing of this Agreement and no part of the Franchise Fee shall be refunded to Franchisee for any reason whatsoever.
- b. In addition to the Franchise Fee, Franchisee shall pay to the Franchisor during the term of this Agreement, a "Royalty" as follows: (a) 4% of total Gross Sales on the initial $1,000,000 in Gross Sales per calendar year, at which point the Royalty is reduced to (b) 3% of Gross Sales on the next $1,000,000 per calendar year, at which point the Royalty is reduced to (c) 2% of Gross Sales over $2,000,000 in such calendar year.
- c. The Royalty shall be payable monthly on the 10th day following the end of each month.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, franchisees are restricted from engaging with competing businesses during the term of their agreement. Specifically, a franchisee cannot operate, own, manage, be employed by, or consult with any competing business. The FDD defines a "Competing Business" 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 is in place to protect Carbones Pizzeria from unfair competition, especially regarding the use of their training, assistance, and trade secrets. The agreement also prevents franchisees from diverting or attempting to divert customers to any competitor of the Carbone System. This non-compete clause is a standard practice in franchising, designed to safeguard the franchisor's brand and market position.
After the termination or assignment of the Franchise Agreement, the franchisee is further restricted for two years. During this period, the franchisee cannot operate, own, manage, be employed by, lease space to, lend money to, or consult with any competing business within the Restricted Area. The "Restricted Area" is defined as the Franchisee Territory, a 25-mile radius from the Franchisee Territory, and a 5-mile radius from any other restaurant operated under the Carbones Pizzeria name. If the franchisee violates this post-term non-compete obligation, the restriction period will be extended by two years after the breach ceases.
Carbones Pizzeria emphasizes the importance of protecting its confidential information, which includes business plans, recipes, standards, and the contents of the Operations Manual. Franchisees, including their owners and employees, are prohibited from using this confidential information at any time, except as necessary for operating the franchise under the agreement. Carbones Pizzeria states that legal remedies may be inadequate in case of a breach and that they are entitled to injunctive relief to enforce these obligations.