factual

What is the duration of the post-term restriction on competition for Chocolate Fish Coffee?

Chocolate_Fish_Coffee Franchise · 2024 FDD

Answer from 2024 FDD Document

  • (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Chocolate Fish Coffee business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Chocolate Fish Coffee business operating on the date of termination.
  • (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Chocolate Fish Franchising. Franchisee agrees that the existence of any claim it may have against Chocolate Fish Franchising shall not constitute a defense to the enforcement by Chocolate Fish Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.

Source: Item 23 — RECEIPTS (FDD pages 41–119)

What This Means (2024 FDD)

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees and certain related parties are subject to a post-term restriction on competition. This restriction lasts for two years after the Franchise Agreement expires or is terminated for any reason, or for two years after a transfer, if applicable.

During this two-year period, the franchisee, any owner, or any spouse of an owner is prohibited from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by any competitor. This restriction applies within five miles of the franchisee's territory or the territory of any other Chocolate Fish Coffee business operating on the date of termination or transfer.

If the Franchise Agreement is terminated before the territory is determined, the area of non-competition will be the Development Area and the territory of any other Chocolate Fish Coffee business operating on the date of termination. The FDD also states that if a restricted party fails to comply with these obligations during the restrictive period, the period will be extended by one day for each day of noncompliance. This clause aims to protect Chocolate Fish Coffee's market and trade secrets by preventing former franchisees from immediately opening a competing business nearby.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.