Does the Crepe De Licious franchise agreement state that the covenants not to compete are considered reasonable?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
"Restricted Territory" means the geographic area within: (i) a 25-mile radius from Franchisee's Crepe de licious business (and including the premises of the approved location of Franchisee); and (ii) a 25 mile radius from all other Crepe de licious businesses that are operating or under construction as of the beginning of the Restricted Period; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then the "Restricted Territory" means the geographic area within a 12-mile radius from Franchisee's Crepe de licious business (and including the premises of the approved location of Franchisee).
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
Based on the 2025 Crepe De Licious Franchise Disclosure Document, the franchise agreement does not explicitly state that the covenants not to compete are considered reasonable. However, the document does outline specific terms and conditions regarding non-competition, both during the agreement and after its termination or transfer. These covenants are designed to protect Crepe De Licious's system, intellectual property, and market presence.
The agreement specifies that during the term of the agreement, franchisees must not engage in any "Prohibited Activities," which include owning, operating, or having an interest in a Competitive Business. After the agreement ends, franchisees are restricted from engaging in a Competitive Restaurant within the Development Area or within a 25-mile radius of any Crepe De Licious Restaurant for a period of two years. A "Competitive Business" is defined as a retail food business that sells or offers any crepe-based food items or gelato.
Notably, the agreement includes a provision that if a court finds the restricted territory too broad, the restricted territory will be reduced to a 12-mile radius from the franchisee's Crepe De Licious business. This suggests an awareness of potential legal challenges to the enforceability of the non-compete clause and a willingness to accept a narrower scope if necessary to ensure enforceability. Prospective franchisees should be aware of these restrictions and consider their implications for future business opportunities should they decide to leave the Crepe De Licious system.