factual

During the term of the Casiola agreement, what constitutes a 'Prohibited Activity' related to competitive businesses?

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, a 'Prohibited Activity' during the term of the franchise agreement includes several actions related to competitive businesses. These restrictions are designed to protect Casiola's market position and prevent franchisees from unfairly competing with the brand.

Specifically, a franchisee is prohibited from owning or having any legal or equitable interest in a Competitive Business, whether as a sole proprietor, owner, partner, member, or shareholder of a Corporate Entity. The only exception is owning 3% or less of a publicly traded company that is a Competitive Business. Additionally, franchisees cannot operate, manage, fund, or perform services for a Competitive Business in any capacity, including as an employee, officer, director, manager, consultant, representative, agent, or creditor.

Furthermore, franchisees are barred from diverting or attempting to divert any business or customers from Casiola, its affiliates, or other franchisees. They are also prohibited from inducing any customer or client of Casiola, its affiliates, franchisees, or the franchisee themselves to any other person or business that is not a Casiola Business. These restrictions also apply to the franchisee's Owners, who are required to sign a Franchise Owner Agreement and Guaranty.

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.