Does the B Bops non-compete agreement prevent a developer from engaging in a similar business through their principals?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
T NOT TO COMPETE.
- A. Developer hereby agrees that during the term of this Agreement, Developer, its directors, officers, shareholders, partners, members, principals or agents will not, directly or indirectly, enter into or engage in any business the same as or substantially similar to a B-Bop's Restaurant, except for any Unit owned and operated by Developer pursuant to a Unit Franchise Agreement entered into between the parties hereto.
- B. Developer hereby agrees that for a period of two (2) years immediately following the termination or expiration of this Agreement, Developer, its directors, officers, shareholders, partners, members, principals or agents will not, directly or indirectly, enter into or engage in any business the same as or substantially similar to a B-Bop's Restaurant operating at any location within the Trade Area or within a twenty (20) mile radius of any other B-Bop's Restaurant then in operation or under construction, whether owned and operated by Company, any affiliate of Company or by a franchisee under license granted by Company, except that Developer shall be entitled to continue to own and operate any Unit pursuant to a Unit Franchise Agreement entered into between the parties hereto.
- C. For purposes of this Section 12, a business shall be deemed the "same as or substantially similar to a B-Bop's Restaurant" if the business is engaged in preparing and serving to the public any food items included from time to time as a standard menu item for a B-Bop's Restaurant.
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- ASSIGNMENT BY DEVELOPER.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the non-compete agreement does extend to the developer's principals. During the term of the Development Agreement, the developer, including its directors, officers, shareholders, partners, members, principals, or agents, is prohibited from directly or indirectly engaging in any business that is the same as or substantially similar to a B Bops Restaurant. The only exception is for Units owned and operated by the Developer under a Unit Franchise Agreement with B Bops.
Following the termination or expiration of the Development Agreement, this restriction continues for two years. During this period, the developer and its associated parties (directors, officers, shareholders, partners, members, principals, or agents) cannot engage in a similar business within the Trade Area or within a 20-mile radius of any B Bops Restaurant in operation or under construction. Again, this excludes any Unit the Developer continues to operate under a Unit Franchise Agreement.
For clarity, the FDD defines a business as "the same as or substantially similar to a B-Bop's Restaurant" if it involves preparing and serving food items that are part of B Bops's standard menu. This broad definition means that principals are significantly restricted from operating or being involved in competing food service businesses during the agreement and for two years afterward within the specified geographic areas. This is further reinforced by the Personal Guaranty, which binds the partners or shareholders of the developer to the non-compete covenants of the Development Agreement.