For how long after the Chop5 Salad Kitchen franchise agreement does the non-competition covenant apply?
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. | |
| expires | ADA: Not Applicable | The ADA does not impose any noncompetition covenants. |
| s. Modification of the agreement | FA: 24.3 & 24.8 ADA: 12.6 | Requires writing signed by both parties (except we may unilaterally change Manual or reduce scope of restrictive covenants). Other modifications to comply with state laws. Requires writing signed by both parties. Other modifications to comply with state laws. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 41–45)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant for one year. This prevents the franchisee from involvement in a competing business from the Restaurant's premises or anywhere within 10 miles of the Restaurant, or within 10 miles of any other Chop5 Salad Kitchen Restaurant located in a state in which the franchisee operates (or operated) a Restaurant.
This post-term non-compete agreement means that for one year after leaving the Chop5 Salad Kitchen system, a former franchisee cannot operate or be involved with a similar business within the specified geographic area. This restriction is designed to protect Chop5 Salad Kitchen's market share and confidential information.
It is important to note that the Area Development Agreement (ADA) does not impose any non-competition covenants. The Franchise Agreement also states that Chop5 Salad Kitchen may unilaterally change the Manual or reduce the scope of restrictive covenants.