Which article of the Cordova Franchise Agreement defines 'Prohibited Activities'?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any
business or clients from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Cordova Business; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and would cause harm to Franchisor, the System and other Cordova Business franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Article 6.D. of the Franchise Agreement defines 'Prohibited Activities'. This section outlines specific actions that a franchisee is restricted from undertaking during the term of the agreement. These restrictions are designed to prevent unfair competition and protect Cordova's interests.
The 'Prohibited Activities' include owning or having a legal or equitable interest in a Competitive Business (with a minor exception for owning 3% or less of a publicly traded company), operating, managing, funding, or performing services for a Competitive Business, diverting business or clients from Cordova or its affiliates and franchisees, and inducing customers or clients to other non-Cordova businesses. Additionally, engaging in any actions that violate Articles 6.B. and/or 6.C. of the agreement also constitutes a 'Prohibited Activity'.
Cordova emphasizes that engaging in these 'Prohibited Activities' would be considered unfair competition and would cause harm to the franchisor, the system, and other franchisees. The agreement extends these restrictions to the franchisee's Owners and Spouses, requiring them to execute a Franchise Owner and Spouse Agreement and Guaranty. This ensures that all key individuals associated with the franchise are bound by these non-compete obligations, safeguarding Cordova's business interests and the integrity of its franchise network.