What is the definition of 'Restricted Period' in the Bang Cookies franchise agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
"Restricted Period" refers to and means the 24 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. 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.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 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, provided they do not hold any ownership in the assignee), or the date an owner or their spouse ceases to be an owner of the franchisee.
This means that for two years after a Bang Cookies franchise agreement ends (whether by its natural expiration, early termination, or transfer), the franchisee is subject to certain restrictions, likely related to non-competition. This prevents a former franchisee from immediately opening a competing business and leveraging the knowledge and experience gained while operating a Bang Cookies franchise. The definition clarifies the specific events that trigger the start of this restricted period, ensuring there is no ambiguity about when the restrictions apply.
However, the definition also includes a clause that addresses enforceability. If a court deems the 24-month period too long to be enforceable, the "Restricted Period" is automatically reduced to 18 months, following the same triggering events. This demonstrates an attempt by Bang Cookies to balance its need to protect its business interests with the legal requirements for reasonable non-compete agreements. Franchisees should be aware of these restrictions and how they might impact their future business endeavors after their franchise agreement concludes.