Is there a Guaranty and Non-Compete Agreement included with the Endless Summer Sweets Franchise Agreement?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
**
In this disclosure document, "we," "us," or "our" refers to Endless Summer Sweets Franchising, Inc. "You" means the person to whom we grant a franchise. If you are a corporation, limited liability company, or other entity, each owner of the franchise entity must sign our Guaranty and Non-Compete Agreement, which means that all of the franchise agreement's provisions also will apply to your owners.
We are Endless Summer Sweets Franchising, Inc. We are a California corporation that was formed on March 9, 2023. Our principal business address is 2358 Shattuck Avenue, Berkeley, California 94704
We have offered franchises since the issuance date of this disclosure document. We do not have a parent entity or any predecessors. Neither we nor our affiliate has offered franchises in any other lines of business. Our affiliate, Endless Summer Sweets, Inc., has operated an Endless Summer Sweets restaurant in Berkely, California since 2016. That restaurant offers the same theme and menu items as the franchise we offer. Our agents for service of process in are disclosed in Exhibit E.
If you sign a franchise agreement with us, you will develop and operate a themed restaurant created to revive the kid in you, bringing back memories of the neighborhood fairs with family and friends. We commit to using local ingredients, whenever possible, and offer fun, fair food, at its finest. If you sign a Multi-Unit Development Agreement you will develop multiple Endless Summer Sweets restaurant outlets, on an agreed-upon schedule. Our form of Multi-Unit Development Agreement is attached as Exhibit C to this disclosure document. For each franchise after the first, we will require you to sign our then-current form of franchise agreement, which may be different from the form of franchise agreement included in this disclosure document.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Endless Summer Sweets Franchise Disclosure Document, a Guaranty and Non-Compete Agreement is part of the franchise agreement. If the franchisee is a corporation, limited liability company, or other entity, each owner of the franchise entity must sign the Guaranty and Non-Compete Agreement. This agreement ensures that all provisions of the franchise agreement apply to the owners as well. The form of the Guaranty and Non-Compete Agreement is included as Exhibit 3 to the Endless Summer Sweets Franchise Agreement.
The Guaranty and Non-Compete Agreement includes covenants not to compete, which restrict the guarantor (owner) from engaging in competitive activities during the term of the Franchise Agreement and for a period after the agreement expires or is terminated. During the term, 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. After the agreement expires or is terminated, this restriction applies for two years within twenty-five (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.
These non-compete restrictions are standard in franchising to protect the franchisor's business model, trade secrets, and market presence. The Endless Summer Sweets agreement specifies that these covenants are independent of other provisions and can be modified by a court or arbitrator if deemed unenforceable or unreasonable. Additionally, the Franchise Agreement also contains a covenant not to compete which extends beyond the termination of the franchise; however, this provision may not be enforceable under California law. Prospective franchisees should be aware of these restrictions and seek legal counsel to understand their implications, especially concerning enforceability in their specific jurisdiction.