What is the consequence of engaging in Prohibited Activities for a Mrcool franchisee?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
If you engage in any Prohibited Activities during the Restricted Period, then you agree that your Restricted Period will be extended by the period of time during which you were engaging in the prohibited activity (any such extension of time will not be construed as a waiver of your breach or otherwise impair any of our rights or remedies relating to your breach).
You acknowledge and agree that this restriction is fair and reasonable and that if you did engage in a Prohibited Activity that such actions would constitute acts of unfair competition and will irreparably harm us and the System.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, engaging in prohibited activities during the term of the agreement or the post-term restricted period can lead to specific consequences. If a franchisee engages in prohibited activities during the restricted period, the restricted period will be extended by the amount of time the franchisee was engaged in the prohibited activity. Mrcool emphasizes that this extension does not waive the breach or impair any of their rights or remedies related to the breach.
Mrcool specifies that engaging in prohibited activities constitutes unfair competition and will cause irreparable harm to Mrcool and the System. These prohibited activities include owning an interest in a competitive business (with a minor exception for publicly traded companies), operating or managing a competitive business, diverting business or customers from Mrcool, inducing Mrcool's customers to another business, or violating specific articles within the agreement.
Furthermore, these restrictions apply not only to the franchisee but also to the franchisee's owners and spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty. Mrcool also states that disclosing confidential information to immediate family members, which then leads to those family members engaging in activities that would be prohibited for the franchisee, will also cause irreparable harm to Mrcool and the System. This highlights the importance Mrcool places on protecting its business interests and maintaining fair competition within its franchise system.