Is there a financial threshold mentioned in relation to the non-competition covenant for Cilantro Taco Grill?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
dicial 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; or (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 within twenty (20) miles of the Development Area or any Cilantro Taco Grill location; 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.
- 8.4 Reasonableness of Restrictions. Multi-Unit Operator acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Multi-Unit Operator since Multi-Unit Operator has other considerable skills, experience and education which afford Multi-Unit Operator the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope. If the period of time or the geographic scope specified above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, the non-competition covenants do not mention a specific financial threshold. The covenants focus on protecting Cilantro Taco Grill's confidential information, trade secrets, and goodwill.
The non-competition covenant for multi-unit operators states that during the term of the agreement, the operator cannot engage in any business that would divert customers or harm the goodwill of the Cilantro Taco Grill system. After the agreement ends, the multi-unit operator is restricted from participating in a Mexican cuisine restaurant business within 20 miles of their Development Area or any Cilantro Taco Grill location for 24 months.
Similarly, for individual franchisees or their employees, the covenant restricts them from diverting business or participating in a Mexican cuisine restaurant. After termination of employment or association, this restriction continues for two years within a 20-mile radius of the franchisee's restaurant or any Cilantro Taco Grill location. The FDD emphasizes that these restrictions are considered reasonable to protect Cilantro Taco Grill's business interests.
In summary, while the non-competition agreements outline specific activities and geographic limitations, there is no mention of a financial threshold that would trigger or modify these restrictions. The focus is on preventing direct competition and protecting the brand's market position and confidential information.