What specific covenants and restrictions does the Casiola agreement require an Owner to agree to in their individual capacity to protect the brand?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Franchisee agrees that, at all times, both during the Term of this Agreement and after its expiration or termination, Franchisee: (a) shall not use the Confidential Information in any business or capacity other than the Casiola Business operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any Confidential Information; (d) shall take such reasonable steps as Franchisor may ask of Franchisee from time to time to prevent unauthorized use or disclosure of the Confidential Information; and (e) shall stop using the Confidential Information immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) 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; and (b) Franchisee's directors, officers, 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.
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.
Franchisee agrees that only through the course of entering into this Agreement is Franchisee being provided with access to the System, Franchisor's training, use of the Licensed Marks, and access to the Operations Manual and Confidential Information. Franchisee agrees that competition by Franchisee, Owners and/or their immediate family members will jeopardize the System and cause irreparable harm to Franchisor and franchisees of Casiola Businesses. Accordingly, Franchisee and Franchisee's Owners agree to comply with the restrictive covenants set forth in this Agreement, including this Article 6.
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants shall also apply to: (a) 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
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, owners are subject to several covenants and restrictions to protect the brand. Casiola requires that the 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. These covenants apply both during the term of the agreement and after its expiration or termination. These obligations include restrictions related to confidential information, know-how, and in-term non-competition.
Specifically, owners must maintain the confidentiality of Casiola's confidential information and know-how, and they are prohibited from using it in any business or capacity other than the operation of the franchised business. They must also take reasonable steps to prevent unauthorized use or disclosure of this information and cease using it immediately upon termination or transfer of the agreement. These restrictions ensure that sensitive business information remains protected and isn't used to benefit competitors.
During the term of the agreement, owners are restricted from engaging in activities considered "Prohibited Activities" such as 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), operating, managing, funding, or performing services for a Competitive Business, diverting business or customers from Casiola, or inducing customers to other businesses that are not Casiola Businesses. These in-term non-competition obligations are designed to prevent owners from directly competing with Casiola while still affiliated with the franchise.
Casiola emphasizes the necessity of these restrictive covenants, stating that competition from franchisees, owners, or their immediate family members would jeopardize the system and cause irreparable harm to the franchisor and other franchisees. By agreeing to these restrictions, owners acknowledge the importance of protecting Casiola's system, training, licensed marks, and confidential information.