What is the B Bops Company prohibited from doing regarding owning, operating, or franchising a B Bops Restaurant within a one-mile radius of existing B-Bop's Restaurants operated by B-Bop's?

According to B Bops's 2025 Franchise Disclosure Document, the company faces certain restrictions regarding the operation and franchising of B Bops restaurants near existing locations operated by B-Bop's. Specifically, the license agreement between B Bops and B-Bop's prohibits B Bops from owning or operating a B Bops Restaurant, or granting development or franchise rights for a B Bops Restaurant, within a one-mile radius of any B Bops Restaurant operated by B-Bop's. This restriction also applies to locations where B-Bop's has informed B Bops in writing of their plans to develop a B Bops Restaurant within one year of the notification date. This agreement was made as partial consideration for B-Bop's assigning ownership of the Licensed Marks and the Licensed System to B Bops, which enabled B Bops to franchise the B Bops Restaurant concept. The assignment was effective as of March 17, 1995.

This provision is crucial for prospective franchisees as it defines the protected territory around existing B-Bop's-operated restaurants. It ensures that B Bops cannot establish a competing company-owned or franchised location that could directly impact the revenue and customer base of a B-Bop's restaurant. This protection extends to planned locations, provided B-Bop's has notified B Bops of their development plans within a specified timeframe.

For a potential franchisee, understanding this restriction is essential when evaluating the location of their prospective franchise. It is important to verify the proximity of any B-Bop's-operated restaurants or planned locations to ensure that the franchisor can indeed grant franchise rights for the desired location. This clause offers a degree of territorial protection, but it is limited to the specified circumstances involving B-Bop's-operated restaurants and does not guarantee exclusive territory against other franchisees or company-owned stores outside this one-mile radius. Therefore, prospective franchisees should carefully consider the implications of this clause in conjunction with other territorial protections offered in the franchise agreement.