What section of the Crab N Spice franchise agreement covers non-competition covenants?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Crab N Spice business operating on the date of termination or transfer, as applicable.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court, then the parties intend that the court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of CNS Franchising. Franchisee agrees that the existence of any claim it may have against CNS Franchising shall not constitute a defense to the enforcement by CNS Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
- 13.3 Employee Recruitment. During the term of this Agreement and for one year after termination, transfer, or expiration of this Agreement, Franchisee shall not knowingly employ or
seek to employ or engage as an independent contractor any person then employed by CNS Franchising or its affiliates.
13.4 General Manager and Key Employees. If requested by CNS Franchising, Franchisee will cause its general manager and other key employees to sign CNS Franchising's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 19–20)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, the non-competition covenants are detailed in Section 13.2 of the franchise agreement. This section outlines restrictions that apply during the term of the agreement and for a period after the agreement expires or is terminated.
During the term of the Crab N Spice agreement, franchisees, owners, and their spouses are prohibited from having any ownership interest in, or being engaged or employed by, any competitor. After the agreement expires or is terminated, this restriction continues for two years 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.
The Crab N Spice franchise agreement specifies that each covenant is independent. Should a court find any part of the non-compete agreement unenforceable, the parties intend for the court to modify the restriction to protect the legitimate business interests of CNS Franchising. The agreement also states that any claims a franchisee may have against CNS Franchising will not be a defense against the enforcement of these non-compete covenants. Furthermore, any non-compliance with these obligations will extend the restrictive period by an additional day for each day of non-compliance.
In addition to the franchisee non-compete obligations, the Crab N Spice agreement also addresses employee recruitment. During the term of the agreement and for one year after termination, transfer, or expiration, franchisees are prohibited from knowingly employing or seeking to employ anyone currently employed by CNS Franchising or its affiliates. CNS Franchising may also require a franchisee's general manager and key employees to sign a confidentiality and non-compete agreement.