Does the Chocolate Fish Coffee Franchise Agreement include a Guaranty and Non-Compete Agreement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Attachment 3 to Franchise Agreement
GUARANTY AND NON-COMPETE AGREEMENT
This Guaranty and Non-Compete Agreement (this "Guaranty") is executed by the undersigned person(s) (each, a "Guarantor") in favor of Chocolate Fish Franchising, LLC, a Wyoming Limited Liability Company ("Chocolate Fish Franchising").
- 2.5 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to Chocolate Fish Franchising, in the form of Attachment 3.
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") 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.
- (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.
- 13.3 General Manager and Key Employees. If requested by Chocolate Fish Franchising, Franchisee will cause its general manager and other key employees to sign Chocolate Fish Franchising's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, the Franchise Agreement does include both a Guaranty and a Non-Compete Agreement. Specifically, if the franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Chocolate Fish Franchising, using the form provided as Attachment 3. This guaranty ensures that the franchisee will fulfill all obligations to Chocolate Fish Franchising, as detailed in the Franchise Agreement.
Furthermore, the Franchise Agreement contains covenants not to compete, which apply both during the term of the agreement and for a period of two years after the agreement expires or is terminated. These restrictions prevent the franchisee, any owner, or their spouse from having any ownership interest in, lending money to, providing services to, or being employed by any competitor within five miles of the Chocolate Fish Coffee territory or the territory of any other Chocolate Fish Coffee business operating at the time of termination or transfer. If the territory hasn't been determined before termination, the non-compete area extends to the Development Area.
The Guaranty and Non-Compete Agreement are crucial components of the Chocolate Fish Coffee franchise system, designed to protect the franchisor's interests and maintain the integrity of the brand. Prospective franchisees should carefully review these sections of the Franchise Agreement and the attached Guaranty and Non-Compete Agreement to fully understand their obligations and restrictions, both during and after the franchise term. It is also important to note that Chocolate Fish Coffee may require the general manager and other key employees to sign a confidentiality and non-compete agreement.