After termination or assignment of the Carbones Pizzeria agreement, can a franchisee own a business that is granting franchises for the operation of a Competing Business in the Restricted Area?
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 the 2025 Carbones Pizzeria Franchise Disclosure Document, a franchisee is restricted from involvement with a competing business after the termination or assignment of their franchise agreement. Specifically, for two years following the termination or assignment, the franchisee cannot 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 Carbones Pizzeria. This restriction also applies to any business or venture that is granting franchises or licenses for the operation of a 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 operated under the Carbones Pizzeria name.
This non-compete clause prevents a former Carbones Pizzeria franchisee from leveraging the franchisor's training, assistance, and trade secrets to unfairly compete with Carbones Pizzeria or its franchisees. The term 'Competing Business' is defined as any eat-in, take-out, or combination eat-in/take-out restaurant that serves pizza. This broad definition means that a former franchisee cannot be involved with virtually any pizza-related business within the specified area.
If a franchisee violates this non-compete agreement, the period during which they are required to abide by the obligation will be extended to two years after they are no longer in breach. This means that any involvement with a competing business, even if brief, can prolong the restriction period. This clause is designed to protect Carbones Pizzeria's market share and prevent former franchisees from using their knowledge gained during the franchise term to benefit a competitor. Prospective franchisees should carefully consider these restrictions and how they might impact their future business endeavors after leaving the Carbones Pizzeria system.