Does the definition of 'Competitive Business' for Monicals Pizza include businesses that grant franchises to others?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
"Competitive Business" means any business, whether direct or indirect, that offers (or grants franchises or licenses to others to operate a business that offers) menu items the same as or similar to those provided by Monical's Restaurants or in which Trade Secrets or other Confidential Information could be used to the disadvantage of Franchisor, any Affiliate or its other franchisees; provided, however, that the term "Competitive Business" shall not apply to (a) any business operated by Franchisee under a Franchise Agreement with Franchisor, (b) any business operated by a publicly-held entity in which Franchisee owns less than a five percent (5%) legal or beneficial interest, or (c) any business such as supermarkets, grocery stores, convenience stores or other retail stores, the primary business of which is not a restaurant;
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the definition of a 'Competitive Business' does include businesses that grant franchises or licenses to others. Specifically, a 'Competitive Business' is defined as any business, whether direct or indirect, that offers (or grants franchises or licenses to others to operate a business that offers) menu items the same as or similar to those provided by Monical's Restaurants.
This definition is important for prospective franchisees because it clarifies the scope of activities that are considered competitive and could be restricted under the franchise agreement. If a franchisee or their affiliates were to engage in such a business, it could be a breach of the agreement.
However, the definition also includes some exceptions. It does not apply to any business operated by the franchisee under a franchise agreement with Monicals Pizza, any business operated by a publicly-held entity in which the franchisee owns less than a 5% legal or beneficial interest, or certain retail stores like supermarkets or convenience stores where the primary business is not a restaurant. These exceptions provide some flexibility for franchisees to engage in other business ventures without violating the non-compete provisions of the franchise agreement.