In the Desi District agreement, are the non-compete covenants independent of other provisions?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
y other Desi District 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 noncompetition will the Development Area and the territory of any other Desi District 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 Desi District Franchise Group. Franchisee agrees that the existence of any claim it may have against Desi District Franchise Group shall not constitute a defense to the enforcement by Desi District Franchise Group 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 General Manager and Key Employees. If requested by Desi District Franchise Group, Franchisee will cause its general manager and other key employees to sign Desi District Franchise Group's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).
**ARTICLE 14.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the non-compete covenants within both the Franchise Agreement and the Guaranty and Non-Compete Agreement are designed to be independent of other provisions. This means that the enforceability of the non-compete clauses does not depend on the validity or enforceability of any other part of the agreement.
For a Desi District franchisee, this independence clause has significant implications. Even if another part of the Franchise Agreement is found to be invalid or unenforceable, the non-compete provisions remain in full effect. This ensures that Desi District can still prevent the franchisee (or a guarantor) from engaging in competitive activities during and after the term of the franchise, regardless of other disputes or issues that may arise under the agreement.
Specifically, the Franchise Agreement states that each covenant within the non-compete section is independent. If any portion of the non-compete is deemed unenforceable, the intention is for a court or arbitrator to modify the restriction only to the extent necessary to protect Desi District's legitimate business interests. Similarly, the Guaranty and Non-Compete Agreement contains a clause affirming the independence of its non-compete covenants. This reinforces Desi District's ability to enforce these restrictions separately from any other claims or disputes. Franchisees and guarantors also agree that any claims they may have against Desi District do not provide a defense against the enforcement of the non-compete covenants.