factual

After ceasing to be an Owner, for how long am I restricted from certain activities related to Ella Cafe?

Ella_Cafe Franchise · 2024 FDD

Answer from 2024 FDD Document

than a Ella Coffee Company, LLC Coffee House operated pursuant to a then-currently effective Franchise Agreement with Franchisor, that: (i) is, or is intended to be, located at the location of the former Location; (ii) is within a five-mile radius of the former Location; or (iii) is within a five-mile radius of any other Coffee House operating under the System and Marks, that is in existence or under development at any location within the United States, its territories, or commonwealths, or any other country, province, state, or geographic area in which Franchisor or its Affiliates have used, sought registration of, or registered the Marks or similar marks, or operate or license others to operate a business under the Marks or similar marks, at the time of such expiration, termination, or transfer. If any Owner ceases to be an Owner of Developer for any reason during the Term of this Agreement, the foregoing covenant will apply to the departing Owner for a two-year period beginning on the date such person ceases to meet the definition of an Owner. The time periods relating to the obligations described in this Section 10.2. will be tolled during any period of noncompliance.

  • 10.3. Additional Provisions. The parties acknowledge and agree that Franchisor has the right, in its sole discretion, to reduce the scope of any covenant set forth in Sections 10.1. and 10.2., or any portion thereof, without Developer's consent or the consent of any Owner, effective immediately upon delivery of written notice to the affected party; and Developer and each Owner agree that such person will comply with any covenant as so modified.

Source: Item 23 — RECEIPTS (FDD pages 50–181)

What This Means (2024 FDD)

According to Ella Cafe's 2024 Franchise Disclosure Document, if an owner ceases to be an owner, they are restricted from certain activities for a period of two years. This restriction begins on the date the person no longer meets the definition of an owner. These restrictions apply specifically to any location that is or is intended to be at the location of any Ella Cafe developed by the Developer or previously operated by the Developer or its affiliates under a Franchise Agreement.

Furthermore, the restrictions extend to any location within a five-mile radius of any Ella Cafe developed or operated by the Developer or its affiliates. It also includes any location within a five-mile radius of any other Ella Cafe operating under the Ella Cafe system and marks. This includes locations in existence or under development within the United States, its territories, or any other geographic area where Ella Cafe or its affiliates have used, sought registration of, or registered their marks.

It's important to note that the time periods for these restrictions will be suspended during any period of noncompliance. This means that if an owner violates the terms of the non-compete agreement, the two-year clock may be paused until the non-compliance is resolved, potentially extending the overall restriction period.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.