What is the definition of 'Restricted Period' for a Bang Cookies franchise?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Spouse or an Immediate Family Member) provided that you do not and your Spouse does not own or hold, in the assignee, any direct or indirect ownership and/or equity interest whether legal, equitable or otherwise; (d) if you are an Owner of Franchisee, the date on which you, in compliance with the terms of the Franchise Agreement, cease to be an Owner of Franchisee; or (e) if you are the Spouse of an Owner of Franchisee, the date on which your Spouse, in compliance with the terms of the Franchise Agreement, ceases to be an Owner of Franchisee. Provided however, that if a court of competent jurisdiction determines that this period of time is too long to be enforceable, then the "Restricted Period" means the 18 month period after the earliest to occur of the following: (a) the expiration of the Franchise Agreement; (b) the termination of the Franchise Agreement; (c) the date on which Franchisee, in compliance with the terms of the Franchise Agreement, assigns the Franchise Agreement to another person (other than you or your Spouse or an Immediate Family Member) provided that you do not and your Spouse does not own or hold, in the assignee, any direct or indirect ownership and/or equity interest whether legal, equitable or otherwise; (d) if you are an Owner of Franchisee, the date on which you, in compliance with the terms of the Franchise Agreement, cease to be an Owner of Franchisee; or (e) if you are the Spouse of an Owner of Franchisee the date on which your Spouse, in compliance with the terms of the Franchise Agreement, ceases to be an Owner of Franchisee.
"Restricted Territory" refers to and means the geographic area: (a) comprising Franchisee's Designated Territory; (b) within a 25 mile radius surrounding Franchisee's Designated Territory or, if Franchisee is not granted 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 the 2024 Bang Cookies Franchise Disclosure Document, the 'Restricted Period' is defined as the 24-month period following the earliest of several events: the expiration of the Franchise Agreement, the termination of the Franchise Agreement, the date the franchisee assigns the agreement to another person (excluding a spouse or immediate family member) without retaining ownership, the date an owner ceases to be an owner of the franchisee, or the date the spouse of an owner ceases to be an owner.
This means that for two years after the franchise agreement ends (through expiration, termination, or transfer), the franchisee may be subject to certain restrictions, such as non-compete clauses. These restrictions are designed to protect Bang Cookies' interests by preventing former franchisees from using the brand's confidential information or competing unfairly. The restrictions apply not only to the franchisee but also to their spouse if they are an owner.
However, there is a caveat. If a court finds that the 24-month period is too long to be enforceable, the 'Restricted Period' is reduced to 18 months following the same triggering events. This acknowledges that overly broad non-compete agreements may not be legally upheld, and provides an alternative, shorter duration. This flexibility aims to balance the franchisor's need to protect its business with the franchisee's right to pursue other opportunities.
Prospective franchisees should be aware of these post-term restrictions and carefully consider their implications. It is important to understand what activities are prohibited during the Restricted Period and within what geographic area. Franchisees should consult with legal counsel to fully understand the enforceability of these clauses in their specific jurisdiction.