What is the purpose of the Nondisclosure and Non-Competition Agreement for a Monicals Pizza franchise?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor has the right to require Franchisee and any holder of a legal or beneficial interest in Franchisee (and any member of their immediate families or households), and any officer, director, executive, manager or member of the professional staff and all employees of Franchisee to execute a nondisclosure and non-competition agreement, in a form acceptable to Franchisor and the same as or substantially similar to the Nondisclosure and Non-Competition Agreement attached as Exhibit 2 ("Nondisclosure and Non-Competition Agreement"), upon execution of this Agreement or prior to each such person's affiliation with Franchisee. Upon Franchisor's request, Franchisee shall provide Franchisor with copies of all nondisclosure and non-competition agreements signed pursuant to this Section. Such agreements shall remain on file at the offices of Franchisee and are subject to audit or review as otherwise set forth herein. Franchisor shall be a third party beneficiary with the right to enforce covenants contained in such agreements.
- 17.2.1 Franchisee acknowledges that the restrictive covenants contained in this Section and in Section 7 are fair and reasonable and are justifiably required for purposes including, but not limited to, the following:
- 17.2.1.1 to protect the Trade Secrets and other Confidential Information of Franchisor;
- 17.2.1.2 to induce Franchisor to grant a Franchise to Franchisee; and
- 17.2.1.3 to protect Franchisor with respect to its costs in training Franchisee and its officers, directors, executives, professional staff and Designated Managers.
- 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); or
17.2.2.2 solicit or otherwise attempt to induce or influence any customer, employee or other business associate of Franchisor to terminate or modify his, her or its business relationship with Franchisor or any Monical's Restaurant, or to compete against Franchisor or any Monical's Restaurant.
- a) During the term of Recipient's relationship with Franchisee and for a period of two (2) years after the expiration or termination of Recipient's relationship with Franchisee, regardless of the cause of expiration or termination, Recipient shall not, 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, divert or attempt to divert any business or customer of Franchisee to any Competitive Business, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Company's service mark "Monical's Pizza®" and such other trade names, trademarks, service marks, trade dress, designs, graphics, logos, emblems, insignia, fascia, slogans, drawings and other commercial symbols as the Company designates to be used in connection with Monical's Pizza Restaurants or the Company's uniform standards, methods, procedures and specifications for the establishment and operation of Monical's Pizza Restaurants.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 31–32)
What This Means (2025 FDD)
According to the 2025 FDD, Monicals Pizza requires a Nondisclosure and Non-Competition Agreement to protect its trade secrets, confidential information, and investment in training franchisees. This agreement is signed by the franchisee, any individuals holding legal or beneficial interest in the franchisee, their immediate family members or households, officers, directors, executives, managers, professional staff, and all employees. Monicals Pizza can request these agreements upon the execution of the Franchise Agreement or before a person's affiliation with the franchisee.
The Nondisclosure and Non-Competition Agreement prevents individuals associated with a Monicals Pizza franchise from engaging in activities that could harm the brand. During their relationship with the franchisee and for two years after, these individuals cannot divert business or customers to a competitive business, or perform actions that damage the goodwill associated with Monicals Pizza. Franchisees are required to provide copies of these agreements to Monicals Pizza, which retains the right to audit or review them and act as a third-party beneficiary to enforce the agreement.
After the termination or expiration of the Franchise Agreement, the agreement restricts franchisees and related parties from owning, managing, operating, or providing services to a competitive business within a 25-mile radius of the Monicals Pizza location or the Area of Primary Responsibility, whichever is greater, or within 25 miles of any other Monicals Pizza restaurant. This restriction lasts for two years, aiming to prevent unfair competition using the knowledge and resources gained from the Monicals Pizza franchise. The agreement also prohibits soliciting employees or business associates of Monicals Pizza to terminate or modify their relationship with the company.
These restrictions are acknowledged as fair and necessary to protect Monicals Pizza's trade secrets, induce the franchisor to grant the franchise, and safeguard the franchisor's investment in training. Breaching the agreement can result in legal action, including injunctions, to prevent further violations, as Monicals Pizza asserts that such breaches would cause immediate and irreparable harm that cannot be fully compensated by monetary damages alone. However, franchisees holding a franchise agreement on April 1, 2008, who owned an interest in, managed, operated, or performed services for a Competitive Business as of April 1, 2008, are permitted to continue to do so for those specific businesses only.