During the term of the Carbones Pizzeria agreement, can a franchisee be employed by a Competing Business?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, during the term of the agreement, a franchisee is restricted from being employed by a Competing Business. Specifically, the franchisee cannot directly or indirectly operate, own, manage, or be employed by or consult with any Competing Business, unless it is operated under a valid franchise agreement with Carbones Pizzeria. This restriction also extends to any business or venture that grants franchises or licenses for the operation of a Competing Business.
This non-compete clause is in place to protect Carbones Pizzeria from unfair competition, particularly regarding the use of their training, assistance, and trade secrets. The agreement also prevents franchisees from diverting or attempting to divert customers to competitors of the Carbone System.
Following the termination or assignment of the franchise agreement, the franchisee is further restricted for two years. During this period, they cannot operate, own, manage, be employed by, lease space to, lend money to, or consult with any Competing Business within the Restricted Area, which includes the Franchisee Territory, a 25-mile radius from the Franchisee Territory, and a 5-mile radius from any other Carbones Pizzeria restaurant. This extended restriction does not apply if the Competing Business is operated under a valid franchise agreement with Carbones Pizzeria.
If a franchisee violates the post-term non-compete obligations, the period of restriction will be extended for two years after the breach is resolved. Additionally, franchisees, their owners, and employees are prohibited from using any Confidential Information, except as necessary for the proper operation of the franchise under the agreement.