After the expiration or termination of the Bang Cookies Franchise Agreement, what is the geographic scope of the non-compete restriction?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
eement; 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.
"Royalty and Activity Report" shall have the meaning defined and set forth in Article 5.B. of this Agreement.
"Royalty Fee" shall have the meaning defined and set forth in Article 5.B. of this Agreement.
"Royalty Rate" shall have the meaning defined and set forth in Article 5.B. of this Agreement.
"Satellite Location" refers to and means a Shop that does not include full production facilities and requires the support and supply of fully prepared or partially prepared cookie dough and baked goods dough or ingredients, from a Bakery Location.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 40)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the geographic scope of the post-termination non-compete is defined by the "Restricted Territory".
The "Restricted Territory" is defined as: (a) the franchisee's Designated Territory; (b) a 25-mile radius surrounding the franchisee's Designated Territory, or if there is no designated territory, a 25-mile radius surrounding the Shop Location; (c) 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 the Agreement; and (d) 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.
However, the document states that if a court deems the Restricted Territory too broad to be enforceable, then the "Restricted Territory" will mean the franchisee's Designated Territory plus a 25-mile radius surrounding it, or if there is no designated territory, a 25-mile radius surrounding the Shop Location. This means that the non-compete agreement's geographic scope could be reduced if the original definition is found to be overly restrictive by a court.
It is important for a prospective Bang Cookies franchisee to understand the specific terms of the non-compete agreement, including the definition of "Restricted Territory" and the potential for judicial modification. Franchisees should also be aware of any state-specific laws that may impact the enforceability of non-compete agreements, such as the Washington State Franchise Investment Protection Act, which may supersede the Franchise Agreement's non-competition provisions.