What is considered a 'Restricted Person' in the context of non-competition for a Bananas Smoothies Frozen Yogurt franchise?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
Therefore, you agree as follows:
(a) Noncompetition and Non-solicitation: During the term of this Agreement neither Developer nor any of Developer's Owners if Developer is a Business Entity (a "Restricted Person") will:
(i) engage in a Competitive Business or perform services for a Competitive Business, directly or indirectly, as a director, owner, proprietor, officer, manager, employee, consultant, representative, agent, independent contractor or otherwise, except under a franchise agreement with Franchisor or Franchisor's affiliates;
(ii) have any direct or indirect interest, as a disclosed or beneficial owner, in a Competitive Business, except under franchise agreements with Franchisor or Franchisor's affiliates;
(iii) have any direct or indirect interest, as a disclosed or beneficial owner, in any entity which is granted or is granting franchises or licenses to others to operate any Competitive Business, except EYB Concepts under franchise agreements with Franchisor or Franchisor's affiliates; or
Source: Item 23 — RECEIPT (FDD pages 58–231)
What This Means (2025 FDD)
According to the 2025 Bananas Smoothies Frozen Yogurt Franchise Disclosure Document, a 'Restricted Person' is defined in relation to non-competition agreements. Specifically, during the term of the franchise agreement, the term 'Restricted Person' applies to the developer (franchisee) and any of the developer's owners if the developer is a business entity.
This means that both the individual franchisee and, if the franchisee is a company, the owners of that company are subject to certain restrictions. These restrictions prevent them from engaging in or having an interest in a 'Competitive Business,' which includes businesses that feature or sell similar types of food, beverages, or smoothies as Bananas Smoothies Frozen Yogurt, such as Green Leaf's Beyond Great Salads or The Market By Villa. The restriction applies whether the involvement is direct or indirect, and covers roles such as director, owner, officer, manager, employee, or consultant.
This non-competition clause aims to protect Bananas Smoothies Frozen Yogurt's confidential information, encourage the free exchange of ideas within the franchise system, and ensure the franchisee's exclusive dedication to the brand. However, an exception exists for owning 5% or less of the stock in a publicly traded company. Furthermore, Bananas Smoothies Frozen Yogurt requires that all of the Developer's Owners execute a Confidentiality, Non-solicitation and Non-competition Agreement.