What constitutes a 'Competitive Business' for a Casa De Corazon franchisee?
Casa_De_Corazon Franchise · 2025 FDDAnswer from 2025 FDD Document
6 RESTRICTIVE COVENANTS
- (a) Covenants. Developer acknowledges Franchisor must be protected against the potential for unfair competition by Developer's use of Franchisor's training, assistance and trade secrets in direct competition with Franchisor. Developer therefore agrees that it shall not:
- (1) During the Term, either directly or indirectly: (i) operate, own, manage, or be employed by or consult with, any Competitive Business; (ii) offering or selling franchises or licenses for a Competitive Business; (iii) divert or attempt to divert any client or potential client to any competitor of Franchisor, or a competitor of a franchisee or of an affiliate of Franchisor; or (iv) otherwise interfere with the business activities of Franchisor or any affiliate or any other franchisee of Franchisor.
- (2) For a period of two (2) years after the Term, either directly or indirectly: (i) operate, own, manage, be employed by or consult with: (A) any Competitive Business located in, or to be located in, the Development Territory, other than one operated under a valid franchise agreement with Franchisor; or (B) any business or other venture located in or doing business in the Development Territory that is offering or selling franchises or licenses for the operation of Competitive
Businesses where located, or any business or other venture located outside of the Development Territory that is offering or selling franchises for Competitive Businesses located in, or to be located in, the Development Territory; or (ii) otherwise interfere with the business activities of Franchisor or any affiliate or any other franchisee of Franchisor, including diversion or attempt to divert any client or potential client to any competitor of Franchisor, or a competitor of a franchisee or of an affiliate of Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 51–215)
What This Means (2025 FDD)
According to the 2025 Casa De Corazon Franchise Disclosure Document, a franchisee is restricted from involvement with a 'Competitive Business' during the term of the agreement and for two years afterward.
During the franchise term, a franchisee cannot directly or indirectly operate, own, manage, be employed by, or consult with any Competitive Business. This also includes offering or selling franchises or licenses for a Competitive Business, diverting clients to competitors, or interfering with the business activities of Casa De Corazon, its affiliates, or other franchisees.
For two years after the franchise term, the restrictions continue. A franchisee cannot be involved with a Competitive Business located in the Development Territory, or any business selling franchises for Competitive Businesses within or outside the Development Territory. This post-term restriction aims to prevent franchisees from using Casa De Corazon's training and trade secrets to unfairly compete with the franchise system. These restrictive covenants are typical in franchising to protect the brand and other franchisees.