Is a Carbones Pizzeria franchisee allowed to operate a competing business during the term of the agreement?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
y or indirectly, or via any third party. However, Franchisee 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.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, franchisees are restricted from operating competing businesses during the term of their franchise agreement. The FDD specifies that a 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 also prohibits franchisees from diverting or attempting to divert customers to any competitor of the Carbone System. This is in place to protect Carbones Pizzeria from unfair competition, ensuring that franchisees do not use the franchisor's training, assistance, and trade secrets to benefit a competing business.
After the termination or assignment of the franchise agreement, the franchisee is further restricted for two years from being involved with any Competing Business within the Restricted Area. The Restricted Area is defined as the Franchisee Territory, a radius of 25 miles from the Franchisee Territory, and a radius of 5 miles from any other restaurant or other facility operated under the Names and Marks. If a franchisee violates this post-term non-compete obligation, the period of restriction will be extended for an additional two years after the breach is resolved. This is to protect Carbones Pizzeria's market and confidential information.