What obligation does Carbones Pizzeria have to prevent other restaurants from opening in a franchisee's territory?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
location.
Franchisee Territory
At the time you acquire the site we have approved we will grant you a territory. This territory will be an area that is generally 5 miles surrounding your Restaurant ("Franchisee Territory"). However, in heavily populated areas this area will be less than 5 miles. The criteria we use for determining the boundaries of the Franchisee Territory in your Franchise Agreement include density of population, growth trends of population, and natural boundaries. We will negotiate the ultimate size of the radius of the Franchisee Territory with you. An approved territory Map and written description will be included as an exhibit in your Franchise Agreement. Territories we grant to franchisees may overlap, but we will not approve anyone opening a Carbone's Pizza restaurant, or relocating a restaurant, the physical premises of which will be in your Franchisee Territory.
As long as you are in compliance with your Franchise Agreement with us we will not establish, nor will we grant a third party the right to establish a restaurant operating under the Carbone's Pizza or Carbone's Pizzeria name, the physical premises of which is in your Franchisee Territory. Other than these limitations there are no prohibitions on us in your Franchisee Territory. For example, we and our affiliates can operate and allow others to operate similar or identical businesses within the Franchisee Territory if such businesses do not operate under the Carbone's Pizza or Carbone's Pizzeria names, and to operate similar or identical business outside of your Franchisee Territory under any trademarks even if the businesses compete with your Restaurant. We and our affiliates can also operate or allow others to operate businesses or other ventures inside the Franchisee Territory under any trademarks, including the Carbone's Pizza or Carbone's Pizzeria marks so long as the businesses are not competitive with your Restaurant. We and our affiliates can sell any products we or our affiliates provide to you for use in your Restaurant to any person, whether in or outside your Franchisee Territory. We and our affiliates can sell or grant third parties the right to sell goods and services competitive with those sold by your Restaurant under any trademarks, including Carbone's Pizza and Carbone's Pizzeria marks, through other distribution channels including the Internet, catalog sales, telemarketing or other direct marketing, in and outside of your Franchisee Territory. We and our affiliates can also sell frozen pizzas and other frozen items, whether under our trademarks or other trademarks, to customers and resellers who may be located in your Franchisee Territory, which includes supermarkets and convenience stores. We and our affiliates can also acquire businesses in the Franchisee Territory that are similar to your Restaurant or sell our business whether through a sale of assets or stock to anyone, regardless whether they operate or franchise the operation of businesses similar to your Restaurant.
You will not receive an exclusive territory.
Source: Item 12 — TERRITORY (FDD pages 19–21)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, franchisees receive a territory, generally a 5-mile radius around their restaurant, although this can be smaller in densely populated areas. Carbones Pizzeria determines the territory size based on population density, growth trends, and natural boundaries, negotiating the final radius with the franchisee. The territory's map and description are included in the Franchise Agreement.
Carbones Pizzeria is restricted from establishing or granting rights to third parties to establish a Carbone's Pizza or Carbone's Pizzeria restaurant within the franchisee's territory. However, territories granted to franchisees may overlap, but Carbones Pizzeria will not approve anyone opening a Carbone's Pizza restaurant, or relocating a restaurant, the physical premises of which will be in your Franchisee Territory.
Despite these protections, the FDD clearly states that franchisees do not receive an exclusive territory. Carbones Pizzeria and its affiliates can operate similar businesses within the franchisee's territory as long as they do not operate under the Carbone's Pizza or Carbone's Pizzeria names. They can also operate similar businesses outside the territory under any trademarks, even if they compete with the franchisee. Furthermore, Carbones Pizzeria can sell products to anyone, including those within the franchisee's territory, and sell competitive goods and services through other channels like the Internet or telemarketing. They can also sell frozen pizzas to supermarkets and convenience stores within the territory.
This lack of exclusivity means a Carbones Pizzeria franchisee could face competition from other businesses owned or franchised by Carbones Pizzeria, as long as they operate under a different name. This is a significant risk to consider, as it could impact the franchisee's potential customer base and revenue. Prospective franchisees should carefully evaluate the competitive landscape in their proposed territory and discuss these potential competitive scenarios with Carbones Pizzeria before signing the Franchise Agreement.