After termination or assignment of the Carbones Pizzeria agreement, can a franchisee consult with 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 consulting with a business that grants franchises for a Competing Business within a specific area for a set period after the agreement ends. Specifically, for two years following the termination or assignment of the Franchise Agreement, 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 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."
The "Restricted Area" is defined as the Franchisee's Territory, a 25-mile radius from the Franchisee's Territory, and a 5-mile radius from any other restaurant operating under the Carbones Pizzeria name. This restriction aims to prevent a former franchisee from using the franchisor's training, assistance, and trade secrets to unfairly compete with Carbones Pizzeria or its franchisees within a defined geographical area.
If a franchisee violates this non-compete clause, 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 after the initial two-year period, will trigger an extension of the non-compete term, ensuring Carbones Pizzeria's interests are protected. This clause is designed to protect Carbones Pizzeria's market share and prevent former franchisees from leveraging inside knowledge to benefit competitors.