What is the geographic scope of the non-compete agreement for Ella Cafe franchisees during the term of the agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
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.
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.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, during the term of the agreement, a franchisee is restricted from engaging in any competitive business within a specific geographic area. This restriction applies to owning, maintaining, or being involved with any casual, fast-casual, or quick-service coffee house, retail Coffee House, food truck, kiosk, cart, or store inside store that offers coffee and/or cafe items as a primary menu item or derives more than 25% of its revenue from these items.
The geographic scope of this non-compete includes a five-mile radius of any Ella Cafe Coffee House. Additionally, franchisees are prohibited from employing or seeking to employ any employee of Ella Cafe or its affiliates, unless the employee's employment has been terminated for at least 120 days or the employee has obtained written consent from the Employer to be hired.
These restrictions do not apply if the franchisee owns less than a five percent beneficial interest in the outstanding securities of any publicly-held corporation. The terms of the non-compete agreement will be suspended during any period of noncompliance. Ella Cafe also retains the right to reduce the scope of any covenant set forth in the Confidentiality Agreement, or any portion thereof, without the franchisee's consent, effective immediately upon written notice.