Are there any exceptions to the Monicals Pizza post-termination non-compete agreement for franchisees holding a franchise agreement on April 1, 2008?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
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
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, there is an exception to the post-termination covenant not to compete for franchisees holding a franchise agreement on April 1, 2008. Specifically, franchisees who owned an interest in, managed, operated, or performed services for a Competitive Business as of April 1, 2008, are permitted to continue to own an interest in, manage, operate, or perform services for those specific Competitive Businesses only. This exception applies regardless of the cause of termination of the franchise agreement.
This exception provides a significant benefit to franchisees who were already involved in a competitive business before becoming part of the Monicals Pizza franchise system. It allows them to maintain their existing business interests without being restricted by the standard non-compete provisions. However, it's crucial to note that this exception is limited to the specific Competitive Businesses that the franchisee was involved with as of April 1, 2008. It does not extend to any new competitive ventures undertaken after that date.
For prospective franchisees, this clause highlights the importance of disclosing any existing business interests that could be considered competitive with Monicals Pizza. If a potential franchisee is already involved in a competitive business, they should ensure that their franchise agreement reflects this exception to the non-compete clause to avoid potential conflicts in the future. This exception only applies to franchisees holding a franchise agreement on April 1, 2008, so new franchisees will not be able to take advantage of this exception.