What is the 'Restricted Period' mentioned in the context of Cordova's non-competition covenants?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
6.E. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND POST-TERMINATION NON-COMPETITION OBLIGATIONS
Franchisee agrees that during the Post-Term Restricted Period, Franchisee shall not engage in any Prohibited Activities provided, however, that the Prohibited Activities relating to Franchisee's having an interest in a Competitive Business will only apply with respect to a Competitive Business that is located within a Restricted Territory. If Franchisee is engaged in any Prohibited Activities during the Post-Term Restricted Period, Franchisee agrees that Franchisee's Post-Term Restricted Period will be extended by the period of time during which Franchisee was engaging in the Prohibited Activity and, any such extension of time will not be construed as a waiver of Franchisee's breach or otherwise impair any of Franchisor's rights or remedies relating to Franchisee's breach. Franchisee agrees that the foregoing covenants and restrictions 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. Franchisee agrees that the covenants and restrictions set forth in this Article 6.E. and otherwise in this Article 6, are fair and reasonable and that if Franchisee engaged in any Prohibited Activity that such actions would constitute acts of unfair competition, causing irreparable harm to Franchisor and the System.
6.F. REASONABLENESS OF RESTRICTIVE COVENANTS AND OBLIGATIONS
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, the term 'Restricted Period' is mentioned within the context of post-termination non-competition obligations. Specifically, during this Post-Term Restricted Period, a franchisee agrees not to engage in any prohibited activities. However, the restriction on having an interest in a competitive business only applies if that business is located within a defined 'Restricted Territory'.
If a Cordova franchisee violates these restrictions during the Post-Term Restricted Period, the period is extended by the amount of time the franchisee was engaging in the prohibited activity. This extension does not waive Cordova's right to address the breach. These covenants and restrictions also apply to the franchisee's owners and spouses, who must also sign a Franchise Owner and Spouse Agreement and Guaranty.
The FDD also defines 'Restricted Territory' as the geographic area comprising the franchisee's operating territory, a 25-mile radius surrounding it, and each of the operating territories of other Cordova businesses in operation or under development during any part of the Restricted Period. However, if a court deems this too broad, the Restricted Territory is limited to the franchisee's operating territory plus a 25-mile radius. This definition is important for franchisees to understand the scope of their non-competition obligations after the franchise agreement ends.