Can Monicals Pizza require a franchisee's family member to sign a non-disclosure and non-competition agreement?
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.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, Monicals Pizza has the right to require a franchisee, any holder of legal or beneficial interest in the franchisee (including members of their immediate families or households), and any officer, director, executive, manager, member of the professional staff, and all employees of the franchisee to execute a non-disclosure and non-competition agreement. This agreement must be in a form acceptable to Monicals Pizza and substantially similar to the agreement attached as Exhibit 2 in the FDD. This requirement applies upon the execution of the Franchise Agreement or before each individual's affiliation with the franchisee.
Monicals Pizza can request copies of all signed non-disclosure and non-competition agreements, which the franchisee must keep on file and make available for audit or review. Monicals Pizza is considered a third-party beneficiary of these agreements, giving them the right to enforce the covenants within them.
This provision ensures that Monicals Pizza can protect its trade secrets, confidential information, and overall business system by preventing those closely associated with the franchisee from engaging in activities that could harm the franchise. Prospective franchisees should carefully review Exhibit 2 of the FDD to understand the specific terms and restrictions outlined in the Nondisclosure and Non-Competition Agreement.