Does the Bang Cookies agreement specify any geographic limitations on ceasing operations?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
"Restricted Territory" refers to and means the geographic area: (a) comprising Franchisee's
Designated Territory; (b) comprising a 25 mile radius surrounding Franchisee's Designated Territory or, if Franchisee is not granted or designated a designated territory, then a 25 mile radius surrounding Franchisee's Shop Location; (c) comprising a 10 mile radius surrounding the Shop Locations for all other Bang Cookies Shops operating and/or under development as of the Effective Date of this Agreement; and (d) comprising a 10 mile radius surrounding the Shop Locations for all other Bang Cookies Shops that are in operation or under development during all or any part of the Post-Term Restricted Period; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then the "Restricted Territory" means the geographic area comprising Franchisee's Designated Territory plus a 25 mile radius surrounding Franchisee's Designated Territory or, if Franchisee is not granted or designated a designated territory, then a 25 mile radius surrounding Franchisee's Shop Location.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchise agreement outlines geographic limitations regarding ceasing operations. The "Restricted Territory" is defined as the franchisee's Designated Territory, or if there is no designated territory, a 25-mile radius around the Shop Location. It also includes a 10-mile radius around other Bang Cookies Shops operating or under development when the agreement takes effect, and a 10-mile radius around other Bang Cookies Shops in operation or development during any part of the Post-Term Restricted Period. However, if a court finds this Restricted Territory too broad, it defaults to the franchisee's Designated Territory plus a 25-mile radius, or a 25-mile radius around the Shop Location if there is no Designated Territory.
This means that upon termination or expiration of the franchise agreement, a franchisee is restricted from operating a similar business within these defined geographic areas. The restrictions apply to prevent unfair competition with existing Bang Cookies locations. The duration of these restrictions is tied to the "Post-Term Restricted Period," although the specific length of this period is not defined in this excerpt.
A prospective Bang Cookies franchisee should carefully consider these geographic restrictions, as they could significantly limit their future business opportunities after the franchise agreement ends. It is important to understand the size and scope of the Designated Territory and how it impacts the ability to operate a similar business nearby. Franchisees should also seek clarification on the length of the Post-Term Restricted Period to fully understand the duration of these limitations.
It is fairly common in the franchise industry to have post-term non-compete clauses with geographic restrictions. These clauses are designed to protect the brand and other franchisees in the system. The enforceability of these clauses can vary by state, and courts may modify them if they are deemed too broad or unreasonable. Therefore, a franchisee should consult with an attorney to understand the specific implications of these restrictions in their jurisdiction.