Does the B Bops non-compete agreement prevent a developer from engaging in a similar business through their shareholders?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
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 explicitly includes shareholders of the developer. 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, etc.) cannot engage in a similar business within the Trade Area or within a 20-mile radius of any B Bops Restaurant that is currently operating or under construction. This applies whether the B Bops Restaurant is owned and operated by the company, its affiliates, or other franchisees. Again, the exception is for Units that the developer continues to own and operate under a Unit Franchise Agreement.
The FDD specifies that a business is considered "the same as or substantially similar to a B-Bop's Restaurant" if it prepares and serves food items that are included as standard menu items at B Bops. This definition ensures that the non-compete clause is clearly defined and enforceable, preventing developers and their shareholders from circumventing the agreement by operating similar food service businesses. This restriction is in place to protect B Bops's market share and brand integrity within the designated areas.