What geographic limitation is placed on post-term non-compete covenants in the Monicals Pizza Area Development Agreement, according to the Indiana addendum?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
| This Addendum to the Area Development Agreement is agreed to this day of, 20, by and between Monical Pizza Corporation and | ||||
|---|---|---|---|---|
| 1. | In recognition of the requirements of the Indiana Deceptive Franchise Practices Law, IC 23-2.2.7 and the Indiana Franchise Disclosure Law, IC 23-2-2-2.5, the Area Development Agreement for Monical Pizza Corporation is amended as follows: | |||
| | Section 8 of the Area Development Agreement is amended to prohibit unlawful unilateral termination of a franchise unless there is a material violation of the Area Development Agreement and termination is not in bad faith. | |||
| | Section 9.4 of the Area Development Agreement is amended subject to Indiana Code 23-2- 2.7-1(9) to provide that post-term non-competitor covenants shall have geographic limitation of the territory granted to Developer. |
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza FDD, the Indiana addendum modifies the Area Development Agreement regarding post-term non-compete covenants. Specifically, Section 9.4 of the Area Development Agreement is amended to include a geographic limitation on these covenants, restricting them to the territory granted to the developer. This amendment is made subject to Indiana Code 23-2-2.7-1(9).
For a prospective Monicals Pizza franchisee in Indiana, this means that after the Area Development Agreement ends, any non-compete agreement will only apply within the specific territory they were granted. This provides more clarity and protection for the franchisee, as it limits the scope of the non-compete to the area where they operated their Monicals Pizza restaurants.
This is a beneficial modification for Indiana developers, as it prevents Monicals Pizza from enforcing a non-compete that could extend beyond their defined territory, which could unduly restrict their ability to pursue other business opportunities after the agreement terminates. Franchise agreements often include non-compete clauses, but the geographic scope can vary significantly, making this Indiana-specific protection a notable advantage.