Is a Carbones Pizzeria franchisee allowed to manage a competing business during the term of the agreement?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 involvement with competing businesses during the term of their agreement. Specifically, a franchisee cannot operate, own, manage, be employed by, or consult with any business that competes with the Carbone System. 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 aims to protect Carbones Pizzeria's interests by preventing franchisees from using the franchisor's training, assistance, and trade secrets to benefit a competing business. It also prevents franchisees from diverting customers to competitors. This non-compete clause is a standard practice in franchising to maintain brand consistency and protect the franchise system's market share.
After the franchise agreement terminates or is assigned, the franchisee is further restricted for two years from being involved with a Competing Business in 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 operating under the Carbones Pizzeria name. If a franchisee violates this post-term non-compete obligation, the restriction period will be extended for two years after the breach ceases. This extended restriction ensures that Carbones Pizzeria can continue to protect its market and trade secrets even after a franchise agreement ends.