What constitutes unfair competition according to the Casiola franchise agreement?
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, engaging in certain activities during the term of the agreement is considered unfair competition. These prohibited activities include owning or having any legal or equitable interest in a Competitive Business, with a limited exception of owning 3% or less in a publicly traded company that is a Competitive Business.
Additionally, operating, managing, funding, or performing services for a Competitive Business, whether as an employee, officer, director, manager, consultant, or in any similar capacity, is prohibited. Diverting or attempting to divert any business or customers from Casiola or its affiliates or franchisees is also considered unfair competition. Inducing any customer or client of Casiola, its affiliates, or franchisees to another business that is not a Casiola Business is also not allowed.
Engaging in any actions or inactions that violate the confidentiality and non-competition obligations outlined in the agreement also constitutes unfair competition. Casiola emphasizes that these actions would be unfair, harm the franchisor, the system, and other franchisees. These covenants and obligations also apply to the franchisee's Owners, who must sign a Franchise Owner Agreement and Guaranty.