What are the consequences of breaching the Non-Compete Agreement associated with the Endless Summer Sweets Franchise Agreement?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
ees that the two-year time period of the non-competition provision shall not accrue during any time period that Franchise or any Restricted Party is in violation of this covenant. If this Agreement is terminated before the Territory is determined,
then the area of non-competition will the Development Area and the territory of any other Endless Summer Sweets business operating on the date of termination.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Franchisor. Franchisee agrees that the existence of any claim it may have against Franchisor shall not constitute a defense to the enforcement by Franchisor of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets Franchise Disclosure Document, there are several consequences for breaching the non-compete agreement. During the term of the agreement, the franchisee, any owner, or any spouse of an owner cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by any competitor. After the agreement expires or is terminated, this restriction continues for two years within a 25-mile radius of the Endless Summer Sweets location or any other Endless Summer Sweets location.
If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance. The agreement specifies that these covenants are independent of any other part of the agreement, and the existence of any claim the franchisee may have against Endless Summer Sweets does not excuse compliance with the non-compete obligations. If any part of the non-compete agreement is deemed unenforceable, the parties intend for a court or arbitrator to modify the restriction to protect Endless Summer Sweets's legitimate business interests.
Endless Summer Sweets also requires that if requested, the franchisee will cause its general manager and other key employees to sign Endless Summer Sweets's then-current form of confidentiality and non-compete agreement. This ensures that key personnel are also bound by similar restrictions, further protecting Endless Summer Sweets's interests. Note that the FDD also states that the non-compete agreement may not be enforceable under California law.