factual

Is diverting business or customers from the Franchisor considered a 'Prohibited Activity' for a Casiola franchisee during the term of the agreement?

Casiola Franchise · 2024 FDD

Answer 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 Casiola's 2024 Franchise Disclosure Document, diverting business or customers from the Franchisor, its affiliates, or franchisees is explicitly considered a 'Prohibited Activity' during the term of the franchise agreement. This restriction is part of the broader restrictive covenants related to unfair competition that Casiola imposes on its franchisees.

Specifically, the FDD states that franchisees are prohibited from diverting or attempting to divert any business or customers from Casiola or its affiliates or franchisees. This means a franchisee cannot actively try to take customers away from the franchisor's network to benefit another business, including their own separate ventures.

Casiola emphasizes that engaging in such prohibited activities would be considered unfair competition and would cause harm to the Franchisor, the System, and other Casiola Business franchisees. The agreement also extends these obligations to the franchisee's Owners, who are required to sign a Franchise Owner Agreement and Guaranty, reinforcing their commitment to these restrictions. This measure aims to protect the integrity and customer base of the Casiola franchise system during the term of the agreement.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.