Does the Monicals Pizza franchise agreement prohibit franchisees from owning an interest in, managing, operating, or performing services for any Competitive Business, and if so, are there any exceptions to this prohibition?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.3.2 Own an interest in, manage, operate, or perform services for any Competitive Business wherever located. Notwithstanding the foregoing, any franchisee holding a franchise agreement
on April 1, 2008 who owns an interest in, manages, operates, or performs services for a Competitive Business as of April 1, 2008 shall be permitted to continue to own an interest in, manage, operate, or perform services for that/those specific Competitive Business(es) only.
- 17.2.2 Except as otherwise approved in writing by Franchisor, neither Franchisee, nor any holder of a legal or beneficial interest in Franchisee, nor any officer, director, executive, manager or member of the professional staff of Franchisee, shall, for a period of two (2) years after the expiration or
termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for themselves or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other business entity:
17.2.2.1 own an interest in, manage, operate or provide services to any Competitive Business, whether directly or indirectly, located or operating (a) within a twenty-five (25) mile radius of the Approved Location or within the Area of Primary Responsibility (whichever is greater), or (b) within a twenty-five (25) mile radius of the location of any other Monical's Restaurant, either owned by or affiliated with Monical Pizza Corporation in existence at the time of termination or expiration (franchisees holding a franchise agreement on April 1, 2008 who own an interest in, manage, operate, or perform services for a Competitive Business as of April 1, 2008 shall be permitted to continue to own an interest in, manage, operate, or perform services for that/those specific Competitive Business(es) only);
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the franchise agreement does place restrictions on a franchisee's involvement with competitive businesses, both during the term of the agreement and after its termination. Specifically, during the franchise agreement, franchisees are prohibited from owning an interest in, managing, operating, or performing services for any Competitive Business, regardless of its location. However, there is an exception for franchisees who held a franchise agreement on April 1, 2008, and already had an interest in a Competitive Business at that time. These franchisees are permitted to continue their involvement with those specific Competitive Businesses.
After the expiration or termination of the Monicals Pizza franchise agreement, the restrictions continue for a period of two years. During this time, franchisees (or anyone holding an interest in the franchise) are prohibited from owning an interest in, managing, operating, or providing services to any Competitive Business within a 25-mile radius of the Approved Location or the Area of Primary Responsibility, whichever is greater. This restriction also applies within a 25-mile radius of any other Monical's Restaurant. The exception for franchisees with pre-existing competitive interests as of April 1, 2008, also applies to these post-termination restrictions.
These non-compete clauses are typical in franchise agreements to protect the franchisor's brand, trade secrets, and customer relationships. For a prospective Monicals Pizza franchisee, this means they must avoid any involvement with competing pizza businesses, not only during their time as a franchisee but also for two years after leaving the system, within the specified geographic areas. It is important to note that these restrictions also apply to anyone holding a legal or beneficial interest in the franchise, as well as officers, directors, executives, managers, and professional staff of the franchisee. Franchisees should carefully consider these limitations before entering into a franchise agreement with Monicals Pizza.