Does the Chocolate Bash Guaranty cover being engaged by a Competitor as an independent contractor?
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 Chocolate Bash's 2024 Franchise Disclosure Document, the Guaranty and Non-Compete Agreement addresses the scenario of being engaged by a Competitor. Specifically, during the term of the Franchise Agreement, the Guarantor (the person signing the Guaranty) is prohibited from directly or indirectly having any ownership interest in, or being engaged or employed by, any Competitor. This restriction applies to both ownership and any form of engagement, including employment.
Furthermore, for two years after the Franchise Agreement expires or is terminated, the Guarantor is restricted from having any ownership interest in, or being engaged or employed by, any Competitor located 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 post-term restriction extends the non-compete obligation for a defined period and geographic area.
The term "Competitor" is defined as any business which offers dessert products from a retail location focusing on chocolate. Therefore, being engaged by a business meeting this definition as an independent contractor would violate the Guaranty and Non-Compete Agreement. This agreement aims to protect Chocolate Bash's business interests by preventing those with knowledge of its operations from working for competing businesses during and for a period after the franchise agreement.