What activities are considered Prohibited Activities for a Casiola franchisee during the franchise relationship?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or customers from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Casiola Business; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and would cause harm to Franchisor, the System and other Casiola Business franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and that Franchisee's Owners shall each execute and deliver to Franchisor the Franchise Owner Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, there are several activities that are considered "Prohibited Activities" for a franchisee during the term of the Franchise Agreement. These restrictions are designed to prevent unfair competition and protect the Casiola brand.
Specifically, a franchisee is prohibited from owning or having any legal or equitable interest in a Competitive Business, with a minor exception of owning 3% or less in a publicly traded company that is a Competitive Business. They are also barred from operating, managing, funding, or performing services for a Competitive Business in any capacity, whether as an employee, officer, director, manager, consultant, or agent.
Furthermore, franchisees cannot divert or attempt to divert business or customers from Casiola, its affiliates, or other franchisees. They are also prohibited from inducing any customer or client of Casiola or its franchisees to another business that is not a Casiola Business. Engaging in any actions that violate Articles 6.B. and/or 6.C. of the Franchise Agreement also constitutes a Prohibited Activity. These restrictions also apply to the franchisee's Owners, who are required to sign a Franchise Owner Agreement and Guaranty.
Casiola considers these activities as unfair competition that would cause harm to the franchisor, the System, and other Casiola Business franchisees. The definition of "Owner" includes officers, directors, managing members, and holders of 5% or more direct or indirect ownership interest in the franchisee or any entity controlling the franchisee.