After termination or expiration of a Chocolate Bash franchise, what is the geographic scope of the non-competition covenant?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| or other agreement | ||
| m. Conditions for | FA: § 15.2 | Pay transfer fee; buyer meets our standards; |
| franchisor’s approval of | ||
| transfer FA: § 15.2 | ||
| MUDA: none | ||
| MUDA: none | buyer is not a competitor of ours; buyer and its owners sign our then-current franchise agreement and related documents (including personal guaranty); you’ve made all payments to us and are in compliance with all contractual requirements; buyer completes training program; you sign a general release; business complies with then-current system specifications (including remodel, if applicable). | |
| n. Franchisor’s right of | If you want to transfer your business (other | |
| first refusal to acquire | ||
| franchisee’s business FA: § 15.5 | ||
| MUDA: none | than to your spouse, sibling, or child), we have a right of first refusal. | |
| o. Franchisor’s option to | ||
| purchase franchisee’s | ||
| business Not Applicable | ||
| p. Death or disability of | If you die or become incapacitated, a new | |
| franchisee FA: §§ 2.4, 15.4 | ||
| MUDA: none | principal operator acceptable to us must be designated to operate the business, and your executor must transfer the business to a third party within nine months. | |
| q. Non-competition | Neither you, any owner of the business, or any | |
| covenants during the term | ||
| of the franchise FA: § 13.2 | ||
| MUDA: none | spouse of an owner may have ownership interest in, or be engaged or employed by, any competitor. | |
| r. Non-competition | For two years, no ownership or employment by | |
| covenants after the | ||
| franchise is terminated or | ||
| expires FA: § 13.2 | ||
| MUDA: none | a competitor located within five miles of your former territory or the territory of any other Chocolate Bash business oper |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 30–34)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee, any owner of the business, or any spouse of an owner is subject to a non-competition covenant. This covenant restricts them from having ownership interest in, or being engaged or employed by, any competitor.
The geographic scope of this restriction extends to a five-mile radius. This five-mile radius is calculated from either the former Chocolate Bash territory of the franchisee or the territory of any other Chocolate Bash business operating on the date of termination.
This means that after leaving the Chocolate Bash system, a former franchisee is limited in their ability to engage with competing businesses within a defined area. This restriction is in place for a period of two years, as stated in the FDD. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they foresee a future desire to operate a similar business in the same geographic area.