What constitutes unfair competition related to my Cordova franchise?
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, engaging in certain activities during the term of the Franchise Agreement is considered unfair competition. These 'Prohibited Activities' include owning or having a legal or equitable interest in a Competitive Business, with a limited exception of owning 3% or less of a publicly traded company that is a Competitive Business. A 'Competitive Business' is defined as any business that is the same as or similar to a Cordova Business, or one that offers general or specific personnel staffing and recruitment services.
Further, it is considered unfair competition to operate, manage, fund, or perform services for a Competitive Business, whether as an employee, officer, director, manager, consultant, representative, agent, or creditor. Franchisees are prohibited from diverting or attempting to divert any business or clients from Cordova, its affiliates, or other franchisees. Inducing any customer or client of Cordova, its affiliates, franchisees, or the franchisee themselves to another business that is not a Cordova Business also constitutes unfair competition.
Cordova emphasizes that engaging in these Prohibited Activities would be unfair and cause harm to Cordova, the System, and other Cordova Business franchisees. These restrictions and obligations also apply to the franchisee's Owners and Spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty. This agreement ensures that all parties with a significant interest in the franchise are bound by the non-compete obligations, protecting Cordova's business interests and the integrity of its franchise system.