Does the Bang Cookies franchise agreement specify which article contains the terms and conditions related to non-competition?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS
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.
6.E. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND POST-TERMINATION NON-COMPETITION OBLIGATIONS
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to the 2024 Bang Cookies Franchise Disclosure Document, Article 6 of the franchise agreement outlines the terms and conditions related to non-competition. Specifically, sections 6.D and 6.E address in-term and post-termination non-competition obligations, respectively. These sections define prohibited activities that a franchisee cannot engage in during the term of the agreement and after its termination.
During the term of the Bang Cookies franchise agreement, franchisees are prohibited from activities such as owning an interest greater than 3% in a publicly traded company that is a competitive business, operating or managing a competitive business, diverting customers from Bang Cookies, or violating Articles 6.B and 6.C of the agreement. These restrictions also apply to the franchisee's owners and spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty.
Post-termination, the franchisee is still restricted from engaging in prohibited activities during the Post-Term Restricted Period. These non-competition obligations are designed to protect Bang Cookies' interests and prevent unfair competition from former franchisees. Franchisees in Washington State should note that Chapter 49.62 RCW limits the use of non-competition agreements and may supersede the Franchise Agreement's non-competition provisions.
Prospective franchisees should carefully review Article 6 of the Bang Cookies franchise agreement, along with Exhibit 1 (Franchise Owner and Spouse Agreement and Guaranty) and Exhibit 2 (Confidentiality Agreement), to fully understand the scope and implications of these non-competition covenants. Franchisees should also be aware of any state-specific laws, such as those in Washington, that may affect the enforceability of these provisions.