Who is subject to the non-competition covenants after the Chocolate Fish Coffee franchise is terminated or expires?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| r. Non-competition | For two years, neither you, any owner of the | |
| covenants after the | business, or any spouse of an owner may have | |
| franchise is terminated or | ownership interest in, lend money or provide | |
| expires | financial assistance to, provide services to, or | |
| be employed by a competitor located within | ||
| five miles of your former territory or the | ||
| territory of any other Chocolate Fish Coffee | ||
| business operating on the date of termination. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 33–36)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the non-competition covenant applies for a period of two years after the franchise is terminated or expires. This covenant restricts the franchisee, any owner of the business, and any spouse of an owner from engaging in competitive activities.
Specifically, these individuals are prohibited from having ownership interest in, lending money or providing financial assistance to, or providing services to a competing business. This restriction is designed to protect Chocolate Fish Coffee's market position and confidential information by preventing former franchisees and their close relations from directly supporting or operating competing ventures.
The non-competition covenant also prevents these individuals from being employed by a competitor located within five miles of the former Chocolate Fish Coffee territory or the territory of any other Chocolate Fish Coffee business operating on the date of termination. This geographical limitation ensures that the restriction is focused on areas where Chocolate Fish Coffee currently operates, further safeguarding its customer base and market share. Franchisees should carefully consider these restrictions, as they could significantly impact their future employment or business opportunities after leaving the Chocolate Fish Coffee system.