Does the Chop5 Salad Kitchen franchise agreement define 'involvement' in a competing business for the purposes of the non-competition covenant?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
| PROVISION | SECTIONS IN AGREEMENT | SUMMARY |
|---|---|---|
| r. Non-competition | FA: 14.3 & 21.1 | No involvement for 1 year in competing business from your |
| covenants after | Restaurant's premises or anywhere within: (a) 10 miles of your | |
| the franchise is | Restaurant; or (b) 10 miles of any other Restaurant located in a state in | |
| terminated or | which you operate (or operated) a Restaurant. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 41–45)
What This Means (2024 FDD)
According to the 2024 Chop5 Salad Kitchen Franchise Disclosure Document, the franchise agreement does not explicitly define what constitutes 'involvement' in a competing business within the non-competition covenants. The FDD mentions that franchisees are restricted from any involvement in a competing business for one year after the franchise is terminated or expires. This restriction applies within a 10-mile radius of the franchisee's restaurant or any other Chop5 Salad Kitchen restaurant in a state where the franchisee operates or has operated.
However, the document does not specify what actions or relationships would be considered 'involvement.' This lack of clarity could create uncertainty for franchisees. For example, it's unclear whether owning stock in a competing company, consulting for a competitor, or simply being employed in a non-managerial role at another restaurant would violate the non-competition agreement.
Prospective Chop5 Salad Kitchen franchisees should seek clarification from the franchisor regarding the definition of 'involvement' in a competing business. Understanding the scope of this restriction is crucial for franchisees to avoid potential breaches of the franchise agreement and related legal issues. It would be prudent to get specific examples of activities that Chop5 Salad Kitchen would consider a violation of the non-compete clause.