What is the radius of the post-term non-compete restriction around an Endless Summer Sweets location?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, the post-term non-compete restriction extends to a 25-mile radius. Specifically, for two years after the franchise agreement expires or is terminated, the franchisee, any owner, or any spouse of an owner cannot be involved with a competing business within a 25-mile radius of the Endless Summer Sweets location or any other Endless Summer Sweets location. This restriction applies regardless of whether the other location is owned by the franchisor or another franchisee.
This non-compete agreement ensures that former franchisees do not directly compete with Endless Summer Sweets, protecting the brand's market share and customer base. The agreement also applies to the physical location of the Endless Summer Sweets business; a franchisee cannot operate a competing business at the same premises. The franchisor deems the two-year period and 25-mile radius as reasonable and necessary to protect their interests if the agreement ends.
It's important to note that the non-compete period does not accrue during any time the franchisee violates the covenant. If the franchise 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 condition highlights the importance of understanding the defined territory and potential implications for post-termination activities.
Additionally, the Guaranty and Non-Compete Agreement signed by the guarantor also includes a similar post-term non-compete clause. For two years after the Franchise Agreement expires or is terminated, the Guarantor cannot be involved with a competing business within twenty-five (25) miles of Franchisee's Territory or the territory of any other Endless Summer Sweets business operating on the date of termination.