What is the geographic radius of the post-term non-compete restriction for the Guarantor of a Chocolate Bash franchise?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Restriction Post Term.
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor located 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.
- (c) Interpretation.
Guarantor agrees that each of the foregoing covenants is independent of any other covenant or provision of this Guaranty or the Franchise Agreement.
If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court, then the parties intend that the court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of CB Franchising.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, a Guarantor is subject to a post-term non-compete agreement. This agreement restricts the Guarantor from having any ownership interest in, or being employed by, a competitor for a period of two years after the franchise agreement expires or is terminated. This restriction also applies for two years after a transfer by the Guarantor.
The geographic scope of this restriction extends to a five-mile radius. Specifically, the Guarantor cannot be involved with a competing business within five miles of the franchisee's territory or the territory of any other Chocolate Bash business operating on the date of termination or transfer.
This non-compete obligation is a significant consideration for anyone acting as a Guarantor for a Chocolate Bash franchise, as it limits their ability to work in or own a competing business within the specified area for two years after the franchise relationship ends. It is important to note that the agreement specifies that if any part of the non-compete is deemed unenforceable by a court, the intention is for the court to modify the restriction to protect Chocolate Bash's business interests.