Are there any exceptions to the non-competition covenants after the B Bops development rights are terminated or expire?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
| M. Conditions for the Company approval of transfer | Section 13 | Proposed transferee must satisfy the Company's current standards for new developers; assumption of Development Agreement; execution of general release (to the extent permitted by Minnesota law) and nondisclosure and noncompetition agreement; payment of $3,000 transfer fee; compliance with transfer provisions of Franchise Agreement if any Franchises simultaneously being transferred; and compliance with right of first refusal granted to the Company. |
|---|---|---|
| N. The Company's right of first refusal to acquire your development rights | Section 13(D) | The Company has the right to purchase the development rights or any ownership interest in the entity owning the development rights upon the same terms and conditions as contained in any bona fide offer received from a third party. |
| O. The Company's option to | None | Not applicable. |
| purchase your development | ||
| rights | ||
| P. Your death or disability | Section 13(B) | The development rights, or any controlling interest in any entity owning the development rights, must be transferred to an approved transferee, with the Company to be notified of the proposed transferee within six (6) months of death or disability. |
| Q. Non-competition covenants | Section 12 | No involvement in a business substantially |
| during the term of the | similar to a B-Bop's Restaurant at any | |
| Development Agreement | location. | |
| R. Non-competition covenants after the development rights are terminated or expire | Section 12 | No involvement in a business substantially similar to a B-Bop's Restaurant for two (2) years after termination or expiration within: (i) the trade area specified in the Development Agreement; or (ii) 20 miles of any other B-Bop's Restaurant then in operation or under development, except that you will be entitled to continue to operate any B-Bop's Restaurant pursuant to a Franchise Agreement entered into with the Company prior to termination or expiration of the development rights. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, there is a specific exception to the non-competition covenant after the development rights are terminated or expire. The standard non-compete clause states that for two years after termination or expiration, a developer cannot be involved in a business substantially similar to a B Bops Restaurant within the trade area specified in the Development Agreement or within 20 miles of any other B Bops Restaurant then in operation or under development.
However, the exception states that a former developer IS entitled to continue operating any B Bops Restaurant pursuant to a Franchise Agreement entered into with B Bops prior to the termination or expiration of the development rights. This means that if a developer has already opened and is operating a B Bops restaurant under a separate franchise agreement, the termination of the development agreement does not prevent them from continuing to run that existing restaurant.
This exception is important for prospective B Bops developers to understand. It allows them to continue operating existing franchises even if their development rights expire or are terminated, providing a degree of security and continued income from already-established locations. This could incentivize developers to focus on building successful individual franchise locations, knowing they can continue to operate them even if they don't fulfill the entire development schedule.