After termination of the Carbones Pizzeria franchise agreement, can a franchisee lend money to 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 lending money to a competing business within a specific area for a set period after the franchise agreement ends. Specifically, for two years following the termination or assignment of the agreement, the franchisee cannot 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 applies to any Competing Business located or doing business in 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 or facility operated under the Carbones Pizzeria brand. A "Competing Business" is defined as an eat-in, take-out, or combination eat-in/take-out restaurant or any other facility that serves pizza.
This non-compete clause is designed to protect Carbones Pizzeria's interests by preventing former franchisees from using the franchisor's training, assistance, and trade secrets to unfairly compete with the franchisor or its franchisees. If a franchisee violates this clause, the period of restriction will be extended to two years after the franchisee ceases the breaching activity. This provision highlights the importance of understanding and adhering to the terms of the franchise agreement, particularly the non-compete obligations, to avoid potential legal and financial repercussions.