After termination or expiration of a Monicals Pizza franchise, what individuals are subject to the non-competition covenants?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Development Agreement | Summary agreements related to the transfer; you or the transferee pay a transfer fee equal to $10,000; the transferee or the owners of transferee have agreed to be personally bound by all provisions of the Development Agreement; the transferee has obtained all necessary consents and approvals of third parties; and you or all of your equity owners have signed a nondisclosure and non-competition agreement in a form acceptable to us and the same as or substantially similar to the Nondisclosure and Non-Competition Agreement attached to the Franchise Agreement. |
|---|---|---|
| n. Franchisor's right of first refusal to acquire developer's development rights | Section 7.5 | We may match an offer for your development rights or an ownership interest you propose to sell. |
| o. Franchisor's option to | Not Applicable | |
| purchase developer's | ||
| development rights | ||
| p. Death or disability of | Not Applicable | |
| developer | ||
| q. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 32–41)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza Franchise Disclosure Document, the post-term non-competition covenants of the Franchise Agreement are incorporated by reference into the Development Agreement. This means that after the Development Agreement is terminated or expires, the non-competition rules outlined in the Franchise Agreement will apply.
While the excerpt specifies that the post-term non-competition covenants from the Franchise Agreement apply, it does not explicitly state which individuals are subject to these covenants. Typically, in franchise agreements, these covenants apply to the franchisee, and may extend to owners, partners, or shareholders with significant equity in the franchise.
To fully understand who is bound by the non-competition covenants after the termination or expiration of a Monicals Pizza franchise, a prospective franchisee should carefully review the specific language in Section 9.4 of the Development Agreement, as well as the referenced post-term non-competition covenants within the Franchise Agreement itself. It would be prudent to seek clarification from Monicals Pizza regarding the scope and applicability of these covenants to all relevant parties associated with the franchise.