After termination or assignment of the Carbones Pizzeria agreement, can a franchisee manage 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
ee 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.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, for two years following the termination or assignment of the Franchise Agreement, a franchisee cannot, 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 Carbones Pizzeria. This restriction also applies to 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 term 'Competing Business' is defined as an eat-in, take-out, or combination eat-in/take-out restaurant of any other facility that serves pizza. 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 Carbones Pizzeria Names and Marks.
This non-compete clause prevents a former Carbones Pizzeria franchisee from leveraging the knowledge and experience gained during their franchise term to benefit a competing pizza business or franchise system within a defined geographic area. The clause aims to protect Carbones Pizzeria's market share and confidential information.
If a franchisee violates this non-compete agreement, the period during which they are required to abide by the breached 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 continued protection from unfair competition. Prospective franchisees should carefully consider the implications of this non-compete clause and its potential impact on their future business endeavors after leaving the Carbones Pizzeria system.