After the expiration or termination of the Bang Cookies Franchise Agreement, for how long are franchisees restricted from participating in a competitive business?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
You and, if you are a Corporate Entity, each of your members, shareholders and/or partners (collectively, "Owners"), must personally guarantee all of your obligations to us under the Franchise Agreement. Each Owner and the spouse of each Owner must personally guarantee your obligations to us under the Franchise Agreement. You and each Owner and spouse must also promise in writing that, among other things, during the term of the Franchise Agreement you will not participate in any business that in any way competes with the Franchised Business, and that for 24 months after the expiration of termination of the Franchise Agreement (with said period being tolled during any periods of non-compliance), neither you nor your Owners and their spouses will participate in any competitive business located within and/or servicing customers located within your Designated Territory and a 25 mile radius surrounding your Designated Territory. Further you will not participate in any competitive business located within and/or servicing customers located within a 10 mile radius of any other Bang Cookies Shop and/or the designated territory of any other Bang Cookies Shop. Your managers and all other employees and agents with access to our confidential information will be required by us to sign a confidentiality agreement.
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, both the franchisee and their owners and spouses are restricted from participating in any competitive business for 24 months after the expiration or termination of the Franchise Agreement. This 24-month period can be extended if the franchisee is not in compliance with the agreement, as the period is "tolled during any periods of non-compliance".
This restriction applies within the franchisee's Designated Territory and extends to a 25-mile radius surrounding it. Furthermore, franchisees are prohibited from engaging in any competitive business located within or servicing customers within a 10-mile radius of any other Bang Cookies Shop or its designated territory. This means that the non-compete extends beyond the franchisee's immediate area to protect other franchisees and the overall brand.
These post-termination restrictions are typical in franchising to protect the brand's confidential information, customer relationships, and market share. Prospective Bang Cookies franchisees should carefully consider the implications of these restrictions, especially if they plan to remain in the same geographic area after leaving the Bang Cookies system. It is important to understand the definition of "competitive business" as defined in the Franchise Agreement to fully grasp the scope of these limitations.