What businesses are considered a 'Competitor' to an Endless Summer Sweets franchise?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
erwise reproduce any Confidential Information, and (f) promptly report any unauthorized disclosure or use of Confidential Information. Franchisee acknowledges that all Confidential Information is owned by Franchisor (except for Confidential Information which Franchisor licenses from another person or entity). This Section will survive the termination or expiration of this Agreement indefinitely.
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties or "Restricted Party") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason or, where applicable, for two years after a Transfer, no Restricted Party shall directly or indirectly operate, have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor which is located at the premises upon which the Endless Summer Sweets is or was located or is located or within a twenty-five (25) mile radius of the Franchisee's location or any other Endless Summer Sweets location, whether owned by Franchisor or another Franchisee. Franchisee expressly agrees that the two-year period and the twentyfive (25) mile radius are the reasonable and necessary time and distance needed to protect Franchisor if this Agreement expires or is terminated for any reason.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets Franchise Disclosure Document, the term 'Competitor' is referenced within the context of covenants not to compete. During the term of the Franchise Agreement, a franchisee, any owner, or any spouse of an owner is restricted from having any ownership interest in, lending money or providing financial assistance to, providing services to, or being employed by any 'Competitor'.
After the agreement expires or is terminated, these restrictions continue for two years. During this post-term period, the restricted parties cannot operate, have ownership in, lend money to, provide services to, or be employed by any 'Competitor'. This applies if the 'Competitor' is located at the former Endless Summer Sweets premises, or within a 25-mile radius of the franchisee's location or any other Endless Summer Sweets location. This includes locations owned by either the franchisor or another franchisee.
The agreement specifies that the two-year and 25-mile radius restrictions are deemed reasonable and necessary to protect Endless Summer Sweets' interests upon termination or expiration of the agreement. The non-competition period does not accrue during any time the franchisee or restricted party is in violation of this covenant. If the agreement is terminated before the territory is determined, the non-competition area will be the Development Area and the territory of any other Endless Summer Sweets business operating on the date of termination. However, the FDD does not specifically define what constitutes a 'Competitor'.
Prospective franchisees should seek clarification from Endless Summer Sweets regarding the specific types of businesses that would be considered 'Competitors'. Understanding this definition is crucial for assessing the restrictions on their activities during and after the franchise term, and for evaluating the potential impact of these restrictions on their other business interests or employment opportunities.