Under what circumstances does the post-term non-competition agreement for Ella Cafe franchisees begin?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Restriction Post Term.
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, or be engaged or employed by, any Competitor located within five miles of Franchisee's Designated Area or the designated area of any other Ella Coffee House business operating on the date of termination or transfer, as applicable.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the post-term non-competition agreement begins after the franchise agreement expires or is terminated for any reason. This also applies if there is a transfer by the guarantor.
The agreement states that for two years after the franchise agreement's expiration or termination, the guarantor cannot have any ownership interest in, or be employed by, any competitor. This restriction applies to competitors located within five miles of the franchisee's designated area or the designated area of any other Ella Cafe business operating on the date of termination or transfer.
This non-compete clause is a significant restriction for franchisees. It limits their ability to work in or own a competing business within a specific geographic area for a defined period after leaving the Ella Cafe system. Franchisees should carefully consider this restriction and how it might impact their future career options before investing in an Ella Cafe franchise.