Does the Chocolate Bash Guaranty cover being employed by a Competitor?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
3. Covenants Not to Compete.
- (a) Restriction In Term.
During the term of the Franchise Agreement, Guarantor shall not directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor.
- (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 the 2024 Chocolate Bash Franchise Disclosure Document, the Guaranty and Non-Compete Agreement specifies restrictions on a guarantor's activities regarding competitors. During the term of the Franchise Agreement, the Guarantor cannot directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor. This restriction applies to the Guarantor, who owns an equity interest in the franchisee, and is designed to protect Chocolate Bash's business interests.
Post-term, for two years after the Franchise Agreement expires or is terminated, the Guarantor is restricted from having any ownership interest in, or being employed by, a Competitor 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 geographic limitation is intended to prevent unfair competition near existing Chocolate Bash locations. The agreement clarifies that each covenant is independent, and if any part is deemed unenforceable, the intention is for the court to modify the restriction to protect Chocolate Bash's legitimate business interests.
These non-compete obligations are in place to protect Chocolate Bash's market position, trade secrets, and customer relationships. The definition of "Competitor" is any business which offers dessert products from a retail location focusing on chocolate. For a prospective franchisee, this means that anyone signing the Guaranty, typically an owner, will be personally bound by these restrictions, affecting their ability to work for or own a competing business both during and for a period after the franchise agreement.