Can a franchisee provide services to a competitor during the term of the Chocolate Fish Coffee agreement?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
ledges that all Confidential Information is owned by Chocolate Fish Franchising (except
for Confidential Information which Chocolate Fish Franchising licenses from another person or entity). This Section will survive the termination or expiration of this Agreement indefinitely.
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.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, during the term of the Franchise Agreement, a franchisee, any owner, or any spouse of an owner is restricted from providing services to a competitor. This restriction extends to directly or indirectly having any ownership interest in, lending money or providing financial assistance to, or being employed by, any competitor. This in-term restriction is a standard clause in franchise agreements to protect the brand's market position and confidential information.
After the agreement expires or is terminated, the restrictions continue for two years. During this post-term period, the franchisee, owner, or spouse cannot engage with any competitor within five miles of the franchisee's territory or 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-competition area will be the Development Area and the territory of any other Chocolate Fish Coffee business.
Chocolate Fish Coffee also requires that if requested, the franchisee will ensure that their general manager and other key employees sign the franchisor's current confidentiality and non-compete agreement, unless prohibited by law. These measures are designed to safeguard Chocolate Fish Coffee's business interests and prevent the dissemination of sensitive information to competitors, both during and after the franchise term.