Is there any exception to the non-competition covenants for a Cilantro Taco Grill Multi-Unit Operator?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
ill be valuable to him or her in the development and operation of Cilantro Taco Grill outlets, and that gaining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Multi-Unit Operator is entering into this Agreement. In consideration for such specialized training, trade secrets, Confidential Information and rights, Multi-Unit Operator covenants that, except as otherwise approved in writing by Franchisor:
- 8.3.1 During the term of this Agreement, Multi-Unit Operator shall not, either directly or indirectly, for himself or herself or through, on behalf of, or in conjunction with, any person or entity (i) divert, or attempt to divert, any business or customer of the Multi-Unit Operator's Cilantro Taco Grill outlets or of other Multi-Unit Operators or franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any restaurant or food service
business featuring Mexican cuisine; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Cilantro Taco Grill Multi-Unit Operators or franchisees or Franchisor-affiliated outlets.
- 8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Multi-Unit Operator shall not, either directly or indirectly, for himself or herself or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of Multi-Unit Operator's Cilantro Taco Grill outlets or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise;
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, there is a potential exception to the non-competition covenants for Multi-Unit Operators. The document states that the non-competition covenants apply "except as otherwise approved in writing by Franchisor." This means that Cilantro Taco Grill may, at its discretion, provide written approval to waive certain aspects of the non-competition agreement for a Multi-Unit Operator.
This exception could be beneficial for a Multi-Unit Operator who wishes to engage in activities that would otherwise be restricted by the non-competition covenants. However, it's important to note that such approval is not guaranteed and is subject to Cilantro Taco Grill's discretion. A prospective franchisee should inquire about the specific circumstances under which Cilantro Taco Grill might grant such exceptions and what criteria are considered.
Additionally, Cilantro Taco Grill retains the right to reduce the scope of any covenant set forth in Article 8, which includes the non-competition agreements. This can be done without the Multi-Unit Operator's consent, and becomes effective immediately once the Multi-Unit Operator receives written notice. This provides Cilantro Taco Grill with flexibility to adjust the non-competition restrictions as it sees fit, which could impact the Multi-Unit Operator's business activities.
If any period of time or geographic scope is adjudged unreasonable, then the period of time will be reduced or the geographic scope will be reduced so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.