As a Chocolate Fish Coffee franchisee, am I required to sign a Non-Compete Agreement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
- (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.
- 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 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, as a franchisee, you, any owner, and any spouse of an owner will be subject to certain non-compete restrictions. During the term of the Franchise Agreement, you are prohibited from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by any competitor.
After the agreement expires or is terminated, this restriction continues for two years. During this two-year period, you, any owner, and any spouse of an owner are restricted from engaging in competitive activities within five miles of your 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 when the agreement is terminated, the non-compete area will be the Development Area and the territory of any other Chocolate Fish Coffee business operating on the date of termination.
Additionally, Chocolate Fish Coffee may require your general manager and other key employees to sign a confidentiality and non-compete agreement, unless prohibited by law. These non-compete covenants are considered independent, and if any part is deemed unenforceable, the parties intend for a court or arbitrator to modify the restriction to protect Chocolate Fish Coffee's business interests. Any claims you may have against Chocolate Fish Coffee do not excuse you from complying with these non-compete obligations. Non-compliance will result in an extension of the restrictive period by one day for each day of noncompliance.