factual

Does the Casiola franchise agreement consider it unfair competition if a franchisee engages in Prohibited Activities?

Casiola Franchise · 2024 FDD

Answer from 2024 FDD Document

, employees and agents where disclosure of the Confidential Information was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.

6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS

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.

6.E. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND POST-TERMINATION NON-COMPETITION OBLIGATIONS

Franchisee agrees that during the Post-Term Restricted Period, Franchisee shall not engage in any Prohibited Activities provided, however, that the Prohibited Activities relating to Franchisee having an interest in a Competitive Business will only apply with respect to a Competitive Business that is located within a Restricted Territory. If Franchisee is engaged in any Prohibited Activities during the Post-Term Restricted Period, Franchisee agrees that Franchisee's Post-Term Restricted Period will be extended by the period of time during which Franchisee was engaging in the Prohibited Activity and, any such extension of time will not be construed as a waiver of Franchisee's breach or otherwise impair any of Franchisor's rights or remedies relating to Franchisee's breach. Franchisee agrees that the foregoing covenants and restrictions 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. Franchisee agrees that the covenants and restrictions set forth in this Article 6.E. and otherwise in this Article 6, are fair and reasonable and that if Franchisee engaged in any Prohibited Activity that such actions would constitute acts of unfair competition, causing irreparable harm to Franchisor and the System.

**6.F.

Source: Item 23 — RECEIPTS (FDD pages 47–209)

What This Means (2024 FDD)

According to the 2024 Casiola Franchise Disclosure Document, the franchise agreement explicitly states that engaging in Prohibited Activities constitutes unfair competition. During the term of the agreement, franchisees are restricted from certain actions defined as "Prohibited Activities." These include owning an interest in a competitive business (with a minor exception for publicly traded companies), operating or providing services to a competitive business, diverting customers from Casiola, and inducing Casiola's customers to other businesses.

The agreement emphasizes that if a franchisee engages in these Prohibited Activities, it would be considered unfair competition and would cause harm to Casiola, the System, and other Casiola franchisees. This obligation extends not only to the franchisee but also to the franchisee's Owners, who are required to sign a Franchise Owner Agreement and Guaranty.

After the termination of the franchise agreement, the franchisee is still restricted from engaging in Prohibited Activities during the Post-Term Restricted Period. If a franchisee violates these restrictions during this period, the Post-Term Restricted Period will be extended by the duration of the prohibited activity. The agreement explicitly states that these restrictions are considered fair and reasonable, and any engagement in Prohibited Activities would constitute acts of unfair competition, causing irreparable harm to Casiola and the System. However, in North Dakota, covenants not to compete are generally considered unenforceable.

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.