factual

What activities are considered 'Prohibited Activities' for a Bang Cookies franchisee during the term of the agreement?

Bang_Cookies Franchise · 2024 FDD

Answer from 2024 FDD Document

Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or customers from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Bang Cookies Shop; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and, collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and would cause harm to Franchisor, the System and other Bang Cookies Shop franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.

Source: Item 23 — RECEIPTS (FDD pages 56–245)

What This Means (2024 FDD)

According to Bang Cookies' 2024 Franchise Disclosure Document, there are several activities that a franchisee is prohibited from engaging in during the term of the franchise agreement. These 'Prohibited Activities' are designed to prevent unfair competition and protect the Bang Cookies brand.

Specifically, a franchisee cannot own or have any legal or equitable interest in a Competitive Business, with a minor exception of owning 3% or less of a publicly traded company that is a Competitive Business. They are also prohibited from operating, managing, funding, or performing services for a Competitive Business. Additionally, franchisees cannot divert or attempt to divert business or customers from Bang Cookies or its affiliates and franchisees, nor can they induce customers to go to a business that is not a Bang Cookies Shop.

Furthermore, franchisees must adhere to specific obligations outlined in Articles 6.B and 6.C of the agreement, and any violation of these articles also constitutes a Prohibited Activity. The agreement explicitly states that engaging in any of these Prohibited Activities would be considered unfair competition and would cause harm to Bang Cookies, the System, and other franchisees. These restrictions also apply to the franchisee's Owners and Spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.