What is the purpose of the Guaranty and Non-Compete Agreement included in the Crab N Spice Franchise Agreement?

According to the 2024 Crab N Spice Franchise Disclosure Document, the Guaranty and Non-Compete Agreement is used to ensure that if the franchisee is an entity, each owner will personally guarantee the franchisee's obligations to Crab N Spice. This agreement, included as Attachment 2 to the Franchise Agreement, is signed by each owner of the franchisee entity. The purpose of this is to induce CNS Franchising to enter into the Franchise Agreement, with the guarantor owning an equity interest in the franchisee.

Furthermore, the Franchise Agreement includes covenants not to compete, which restrict the franchisee, any owner, or any spouse of an owner from having any ownership interest in, or being engaged or employed by, any competitor during the term of the agreement. This restriction also extends for two years after the agreement expires or is terminated, within five miles of the franchisee's territory or the territory of any other Crab N Spice business operating on the date of termination or transfer.

These non-compete provisions are designed to protect Crab N Spice's business interests and prevent franchisees or related parties from using the franchisor's confidential information and system to compete against them, both during and for a period after the franchise agreement. The agreement specifies that these covenants are independent and enforceable, and the restrictive period will be extended an additional day for each day of noncompliance if a restricted party fails to comply with the obligations.