After termination or assignment of the Carbones Pizzeria agreement, can a franchisee operate a competing business under a valid franchise agreement with the franchisor 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, a franchisee can operate a competing business within the Restricted Area if it is operated under a valid franchise agreement with Carbones Pizzeria, even after termination or assignment of the original franchise agreement. 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 facility operated under the Carbones Pizzeria brand.
This allowance is subject to a non-compete agreement that the franchisee agrees to, which states that for two years following the termination or assignment of the agreement, the franchisee cannot operate, own, manage, be employed by, lease space to, lend money to, or consult with any Competing Business within the Restricted Area. However, this restriction does not apply if the competing business is operated under a valid Carbones Pizzeria franchise agreement.
This clause protects Carbones Pizzeria by ensuring that former franchisees do not use the franchisor's trade secrets and training to directly compete with the brand, unless they continue to operate under the Carbones Pizzeria system. The extension of the non-compete period if the franchisee breaches the obligation further safeguards Carbones Pizzeria's interests. For a prospective franchisee, this means that while they are restricted from opening an independent competing pizza business in the defined area for two years after leaving the franchise system, they could potentially continue in the pizza business within that area if they obtain a new Carbones Pizzeria franchise.