factual

What is the definition of 'Competitive Business' in the Bang Cookies franchise 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 the 2024 Bang Cookies Franchise Disclosure Document, the franchise agreement outlines specific restrictions on franchisees regarding competitive business activities during the term of the agreement. A franchisee is prohibited from engaging in activities considered "Prohibited Activities." These activities include owning or having a legal or equitable interest in a Competitive Business, with a minor exception of owning 3% or less in a publicly traded company that is a Competitive Business.

Additionally, franchisees are restricted from operating, managing, funding, or performing services for a Competitive Business, whether as an employee, officer, director, manager, consultant, representative, agent, or creditor. They are also barred from diverting or attempting to divert any business or customers from Bang Cookies, its affiliates, or franchisees. Inducing customers or clients of Bang Cookies to another business that is not a Bang Cookies Shop is also prohibited.

Bang Cookies emphasizes that engaging in these Prohibited Activities would be considered unfair competition and would cause harm to the franchisor, the Bang Cookies 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. This comprehensive approach aims to protect Bang Cookies' market position and the interests of its franchisees by preventing unfair competition during the term of the franchise agreement.

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.