Is a B Bops franchisee prohibited from being a shareholder in a business substantially similar to B Bops during the term of the agreement?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
That during the Term of this Agreement, Franchisee, its directors, officers, shareholders, partners, members, employees and agents will not, directly or indirectly, enter into or engage in any business as a director, officer, shareholder, proprietor, partner, consultant, employee or in any other position or capacity, which business is engaged at any location in a business the same as or substantially similar to that of a B-Bop's Restaurant (except for any other B-Bop's Restaurant owned and operated by Franchisee pursuant to a franchise agreement with Company);
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a franchisee is restricted from being a shareholder in a business that is substantially similar to B Bops during the term of the franchise agreement. Specifically, the franchisee, its directors, officers, shareholders, partners, members, employees, and agents are prohibited from engaging in a business that is the same as or substantially similar to B Bops. The only exception is if the franchisee owns and operates another B Bops Restaurant under a separate franchise agreement with the company.
This restriction applies to anyone acting in various capacities, including as a director, officer, shareholder, proprietor, partner, consultant, or employee. This broad definition ensures that the franchisee and related parties cannot be involved in a competing business in any significant way. The FDD also defines what constitutes a business "substantially similar to a B-Bop's Restaurant," clarifying that it includes any business engaged in preparing and serving to the public any food item from time to time included as a standard menu item for a B-Bop's Restaurant.
This non-compete clause is in place to protect B Bops's market share and brand integrity. By preventing franchisees from operating or being involved in competing businesses, B Bops aims to maintain a consistent brand experience and prevent the sharing of confidential business information with competitors. Franchisees should be aware of these restrictions and ensure they do not violate them, as doing so could result in termination of the franchise agreement.