Does the Ella Cafe non-compete apply in any commonwealth where the franchisor has registered the marks?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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. This restriction will apply for two years after I cease to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) to any location that: (i) is, or is intended to be, located at the location of any Coffee House developed by Developer or previously operated by Developer of its Affiliate(s) under the terms of a Franchise Agreement; (ii) is within a five-mile radius of any Coffee House developed by Developer or operated by Developer or its Affiliate(s) under the terms of a Franchise Agreement; or (iii) is within a fivemile 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. The time periods relating to the restrictions set forth in this Section 6. will be tolled during any period of my noncompliance.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the non-compete agreement extends to any commonwealth where Ella Cafe or its affiliates have used, sought registration of, or registered their trademarks. This means that after the franchise agreement expires, is terminated, or the franchisee transfers the franchise, the franchisee is restricted from engaging in any competitive business within specific locations.
The restrictions apply for two years after the end of the agreement. The non-compete prevents the franchisee from owning, maintaining, advising, operating, or being involved with any casual, fast-casual, or quick-service coffee house or retail coffee house that offers coffee and/or cafe items as a primary menu item or derives more than 25% of its revenue from those items. This restriction applies if the competitive business is located at the former Ella Cafe location, within a five-mile radius of the former location, or within a five-mile radius of any other Ella Cafe operating under the Ella Cafe system and marks.
This non-compete extends to any location within the United States, its territories, or commonwealths, or any other country, province, state, or geographic area where Ella Cafe or its affiliates have used, sought registration, or registered the marks. The restrictions are in place to protect Ella Cafe's market presence and brand recognition in areas where they have established or are actively developing their brand. The time periods during which the non-compete is in effect will be suspended during any period of noncompliance.