Can stockholders of a Coffee News franchisee be involved in a competing publication during the non-competition period?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Agreement and for a period of two (2) Years after the termination, expiration, transfer, or assignment of this Agreement, Franchisee, either as individuals or a business entity, their family members or the officers, directors, other key personnel, employees or stockholders, as the case may be, shall not directly or indirectly, through corporations, partnerships, trusts, associations, joint ventures, or unincorporated businesses, perform any services for, engage in or acquire, be an employee of, have any financial, beneficial, or equitable interest in, or have any interest whatsoever in any publication of a type similar to the Periodical that operates within the region covered by this agreement .
Franchisee shall execute a non-competition agreement with its employees, officers, key personnel, agents, or stockholders, as the case may be, that such employees, officers, key personnel, agents, or stockholders, as the case may be, shall be bound by the contractual provisions contained in this paragraph, and will be liable for damages caused by violation of the provision contained herein plus reasonable attorney fees and court cost if the Franchisor and/or Franchisee has to enforce their contractual rights by legal actions.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, during the term of the agreement and for two years after termination, expiration, transfer, or assignment, stockholders of a Coffee News franchise cannot directly or indirectly perform services for, engage in, acquire, be an employee of, have any financial, beneficial, or equitable interest in, or have any interest whatsoever in any similar publication operating within the Coffee News franchisee's region. This restriction applies whether the stockholder acts as an individual or through a business entity such as a corporation, partnership, trust, association, joint venture, or unincorporated business.
This non-compete obligation extends not only to the franchisee but also to their family members, officers, directors, other key personnel, employees, and stockholders. To ensure compliance, Coffee News requires franchisees to execute a non-competition agreement with these individuals, binding them to the contractual provisions. These individuals will be liable for damages caused by violating the non-compete agreement, including reasonable attorney fees and court costs if Coffee News has to take legal action to enforce its rights.
This provision is designed to protect Coffee News's market and business interests by preventing individuals associated with the franchise from using their knowledge and resources to compete with the franchise within its designated territory during and for a period after the franchise agreement. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they or their associates have existing interests in similar publications. It is important to fully understand the scope and duration of the restriction and to ensure that all relevant parties are aware of and willing to comply with its terms.