What is the geographic scope of the non-compete agreement for a Coffee News franchisee?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- The parties to this Agreement understand and agree Enforceability. 16.7 that, if any portion of the restrictive covenants set forth in this Agreement is held to be unreasonable, arbitrary, or against public policy, then that portion of those covenants shall be considered divisible as to time and region.
The parties to this Agreement agree that if any court or competent jurisdiction determines that the specified time period or the specified region of application of any covenant is unreasonable, arbitrary, or against public policy, then a lesser time period, geographical area or both, that is determined to be reasonable, non-arbitrary, and not against public policy, may be enforced against the parties hereto.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
Based on the 2025 Coffee News Franchise Disclosure Document, the enforceability of restrictive covenants, including non-compete agreements, is tied to both time and region. The agreement specifies that if any part of these covenants is deemed unreasonable, arbitrary, or against public policy, it should be considered divisible concerning time and region. This means that if a court finds the restrictions too broad, it can modify them to be more reasonable.
Specifically, the Coffee News franchise agreement states that if a court determines the specified time period or geographical area of any covenant is unreasonable, arbitrary, or against public policy, a lesser time period or geographical area may be enforced. This ensures that the non-compete is not overly restrictive and remains fair to the franchisee.
This clause provides a safety net, allowing courts to adjust the non-compete terms to be fair and reasonable, rather than invalidating the entire agreement. Prospective franchisees should be aware that the exact terms of the non-compete, including the duration and geographic scope, could be subject to judicial review and modification if challenged.