Can a Competitor be a proposed assignee of a Chocolate Bash franchise?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
"Competitor" means any business which offers dessert products from a retail location focusing on chocolate.
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Chocolate Bash business operating on the date of termination or transfer, as applicable.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, a "Competitor" is defined as any business which offers dessert products from a retail location focusing on chocolate.
During the term of the Franchise Agreement, neither the franchisee, any owner, nor any spouse of an owner can directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor. After the agreement expires or is terminated, this restriction continues for two years within five miles of the Chocolate Bash franchise's territory or the territory of any other Chocolate Bash business operating on the date of termination or transfer.
This clause suggests that while a franchisee is operating a Chocolate Bash business, they cannot be involved with a competing business. The FDD does not explicitly state whether a competitor can be a proposed assignee of a Chocolate Bash franchise. However, the restrictions on ownership and engagement with competitors suggest that Chocolate Bash aims to prevent conflicts of interest and protect its brand and market position. A prospective franchisee should seek clarification from the franchisor regarding the specific conditions under which a competitor might be considered as a potential assignee.