If a court finds a covenant in Section 9 of the Cicis franchise agreement unreasonable, what happens according to the agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) The parties acknowledge and agree that each of the covenants contained herein contain reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect our goodwill or other business interests. The parties agree that each of the covenants herein will be construed as independent of any other covenant or provision of this Agreement. If all or any portion of a covenant in this Section 9 is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which we are a party, then the Persons bound by this Section 9 shall be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section 9.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the franchise agreement contains clauses addressing the possibility that a court might deem a covenant within Section 9 unreasonable or unenforceable. In such a case, the parties agree that each covenant within Section 9 is independent. If a court finds any part of Section 9 unreasonable, the individuals bound by Section 9 will adhere to a lesser covenant. This lesser covenant will impose the maximum duty permitted by law, as if it were originally written as part of Section 9. This ensures that some form of restriction remains in place, protecting Cicis's interests to the fullest extent legally possible.
This clause is designed to prevent the entire non-compete agreement from being invalidated if a specific provision is found to be overly broad or restrictive. By agreeing to be bound by a lesser, legally permissible covenant, the franchisee acknowledges the intent to adhere to some level of restriction. This could involve a reduced geographic area, a shorter time frame, or a more narrowly defined scope of prohibited activities.
For a prospective Cicis franchisee, this means that even if a specific part of the non-compete agreement is challenged and found unreasonable, they are still likely to be bound by some form of restriction. It is important to understand the implications of Section 9 and to seek legal counsel to fully understand the scope of these restrictions and how they might affect their future business activities after the franchise agreement expires or is terminated.