Is violating a non-compete agreement considered a non-curable default for a Chocolate Bash franchise?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| h. “Cause” defined--non- | FA: § 14.2 | FA: Misrepresentation when applying to be a |
| curable defaults | ||
| MUDA: § 4 | franchisee; knowingly submitting false information; bankruptcy; lose possession of your location; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our business inspection; cease operations for more than 5 consecutive days; three defaults in 12 months; cross-termination; conviction of a felony, or accusation of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. MUDA: failure to meet development schedule; violation of franchise agreement or other agreement which gives us the right to terminate it. |
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, violating a non-compete agreement is considered a non-curable default that could lead to the termination of the franchise agreement. Specifically, if a franchisee violates the non-compete clause, Chocolate Bash has grounds to terminate the agreement without providing an opportunity to cure the default.
This means that if a Chocolate Bash franchisee, or any owner of the business, or even a spouse of an owner, has ownership interest in, or is engaged or employed by, any competitor during the term of the franchise, it would be considered a non-curable default. Similarly, after the franchise is terminated or expires, if the franchisee engages in a competitive business within five miles of their former territory or any other Chocolate Bash location operating at the time of termination, it would also be a non-curable default.
For a prospective franchisee, this underscores the importance of fully understanding and adhering to the non-compete covenants outlined in the franchise agreement. Violating these covenants can have severe consequences, including immediate termination of the franchise. Franchisees should carefully consider these restrictions, both during the franchise term and after its termination or expiration, to avoid any actions that could be construed as a breach of the agreement.