factual

What is the geographic scope of the non-compete agreement for Ella Cafe?

Ella_Cafe Franchise · 2024 FDD

Answer from 2024 FDD Document

demonstrate that such information has become generally known or easily accessible other than by the breach of an obligation of Developer under the Development Agreement.

    1. Except as otherwise approved in writing by Franchisor, I will not, while in my position with Developer and for a continuous uninterrupted period commencing upon the cessation or termination of my relationship and/or position with Franchisee, regardless of the cause for cessation or termination, and continuing for two years thereafter, either directly or indirectly, for myself or through, on behalf of, or in conjunction with any other person, partnership, corporation,

accuracy of this information. Any action you take upon the information you find on this website (FranChimp.com), is strictly at your own risk. We will not be liable for any losses and/or damages in connection with the use of our website.

or other limited liability company own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to, or have any interest or relationship or association with any casual, fast-casual, or quick-service coffee house, retail Coffee House, food truck, kiosk, cart, or store inside store of any type, that offers coffee and/or assorted café items as a primary menu item or that derives more than 25% of its revenue from the sale of coffee and/or assorted café items within a five-mile radius of any Ella Café Coffee House , nor will I directly or indirectly employ or seek to employ any employee of Franchisor or an Affiliate of Franchisor (collectively, "Employers"), unless such employee's employment has been terminated for 120 days or more, or such employee has obtained written consent from Employer that the employee may be hired. The restrictions in this Section 6 do not apply to my ownership of less than a five percent beneficial interest in the outstanding securities of any publicly-held corporation. The time periods relating to the restrictions set forth in this Confidentiality Agreement will be tolled during any period of my noncompliance.

    1. I agree that each of the foregoing covenants will be construed as independent of any other covenant or provision of this Confidentiality Agreement. If all or any portion of a covenant in this Confidentiality Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which Franchisor is a party, I expressly agree to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Confidentiality Agreement.
    1. I understand and acknowledge that Franchisor has the right, in its sole discretion, to reduce the scope of any covenant set forth in this Confidentiality Agreement, or any portion thereof, without my consent, effective immediately upon receipt by me of written notice thereof, and I agree to comply forthwith with any covenant as so modified. I also understand that neither I nor Developer may make any changes to this Confidentiality Agreement without the written consent of Franchisor.
    1. Franchisor is a third-party beneficiary of this Confidentiality Agreement and may enforce it, solely and/or jointly with Developer. I am aware that my violation of this Confidentiality Agreement will cause Franchisor and Developer irreparable harm; therefore, I acknowledge and agree that Developer and/or Franchisor may apply for the issuance of an injunction preventing me from violating this Confidentiality Agreement, and I agree to pay Developer and Franchisor all the costs it/they incur(s), including, without limitation, legal fees and expenses, if this Confidentiality Agreement is enforced against me.

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

What This Means (2024 FDD)

According to Ella Cafe's 2024 Franchise Disclosure Document, there are two non-compete agreements: one during the term of the agreement and another after the agreement terminates. During the term of the agreement, the franchisee cannot be involved with any coffee house that offers coffee and/or assorted café items as a primary menu item or that derives more than 25% of its revenue from the sale of coffee and/or assorted café items within a five-mile radius of any Ella Cafe Coffee House. This restriction also prevents franchisees from employing or seeking to employ any employee of Ella Cafe or its affiliates, unless the employee's employment has been terminated for 120 days or more, or the employee has obtained written consent from the Employer that the employee may be hired. An exception exists for ownership of less than a five percent beneficial interest in the outstanding securities of any publicly-held corporation.

After the agreement terminates, the franchisee cannot be involved with a similar coffee house 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 Ella Cafe 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. This post-term covenant applies for two years after the agreement ends.

These non-compete clauses are typical in franchising to protect the brand and market share of Ella Cafe. The franchisor can reduce the scope of any covenant set forth in this Confidentiality Agreement, or any portion thereof, without the franchisee's consent, effective immediately upon receipt by the franchisee of written notice thereof. The franchisee may not make any changes to this Confidentiality Agreement without the written consent of Ella Cafe.

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.