Who are considered 'Restricted Parties' under the Crown Gold Exchange agreement's non-compete clause?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
t, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be 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, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Crown Gold Exchange business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Crown Gold Exchange business operating on the date of termination.
- (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 arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Crown Gold Franchising. Franchisee agrees that the existence of any claim it may have against Crown Gold Franchising shall not constitute a defense to the enforcement by Crown Gold 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.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
Based on the 2024 Crown Gold Exchange Franchise Disclosure Document, the non-compete clause applies to both the franchisee and the guarantor.
Specifically, after the franchise agreement expires or is terminated, the franchisee is restricted from having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by, any competitor within five miles of the franchisee's territory or the territory of any other Crown Gold Exchange business operating on the date of termination or transfer. This restriction lasts for two years. If the agreement is terminated before the territory is determined, the non-competition area will be the Development Area and the territory of any other Crown Gold Exchange business operating on the date of termination.
Similarly, the guarantor is also subject to a non-compete agreement. During the term of the Franchise Agreement, the Guarantor cannot directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor. After the Franchise Agreement expires or is terminated for any reason, the Guarantor is restricted for two years from similar activities within five miles of the Franchisee's Territory or the territory of any other Crown Gold Exchange business. If the Franchise Agreement is terminated before the Territory is determined, the non-competition area will be the Development Area and the territory of any other Crown Gold Exchange business operating on the date of termination.
Additionally, Crown Gold Exchange may require the franchisee's general manager and other key employees to sign a confidentiality and non-compete agreement, unless prohibited by applicable law. This ensures that key personnel are also bound by non-compete obligations to protect Crown Gold Exchange's interests.