What power does the court have regarding the terms of the Chop5 Salad Kitchen agreement?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
"Restricted Territory" means: the geographic area within: (a) a 10-mile radius from Franchisee's Restaurant (and including the Restaurant's premises itself); and (b) a 10-mile radius from all other Restaurants that: (i) are operating or under construction as of the date of this Agreement; (ii) remain in operation or under construction during all or any part of the Restricted Period; and (iii) are located in any state in which Franchisee (or any affiliate of Franchisee) operates, or has operated, a Restaurant; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then Restricted Territory means: the geographic area within: (a) a five (5) mile radius from Franchisee's Restaurant (and including the Restaurant's premises itself); and (b) a five (5) mile radius from all other Restaurants that: (i) are operating or under construction as of the date of this Agreement; (ii) remain in operation or under construction during all or any part of the Restricted Period; and (iii) are located in any state in which Franchisee (or any affiliate of Franchisee) operates, or has operated, a Restaurant.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to the 2024 Chop5 Salad Kitchen Franchise Disclosure Document, a court of competent jurisdiction has the power to modify the restricted territory outlined in the agreement. Specifically, the standard agreement defines the "Restricted Territory" as the geographic area within a 10-mile radius of the franchisee's restaurant and other Chop5 Salad Kitchen locations operating or under construction in the same state.
However, the agreement stipulates that if a court finds this 10-mile radius too broad to be enforceable, the "Restricted Territory" will be reduced to a 5-mile radius from the franchisee's restaurant and other Chop5 Salad Kitchen locations. This adjustment applies only if the other restaurants were operating or under construction as of the agreement date, remain so during any part of the post-term restricted period, and are located in a state where the franchisee or its affiliates operate or have operated a Chop5 Salad Kitchen restaurant.
This clause provides a safeguard, ensuring that the non-compete provisions are reasonable and enforceable. It protects Chop5 Salad Kitchen's interests while acknowledging potential legal challenges to overly broad restrictions. Prospective franchisees should understand that the enforceable restricted territory could be significantly smaller if a court deems the initial 10-mile radius unreasonable.