In the context of the Endless Summer Sweets franchise agreement, what constitutes a 'Competitor'?
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. Franchisee agrees 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 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
The 2024 Endless Summer Sweets Franchise Disclosure Document (FDD) specifies that 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 franchise agreement expires or is terminated, for two years, these restricted parties are prohibited from engaging with a 'Competitor' 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 restriction applies whether the other location is owned by Endless Summer Sweets or another franchisee. 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.
This non-compete agreement also extends to any Guarantor. During the term of the Franchise Agreement, the Guarantor cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor. For two years after the Franchise Agreement expires or is terminated, the Guarantor is restricted from involvement with a Competitor within 25 miles of the Franchisee's Territory or the territory of any other Endless Summer Sweets business operating on the date of termination or transfer.