After the Bang Cookies franchise is terminated or expires, what geographic areas are covered by the non-competition covenants?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. | We have the right to match any offer to purchase your Shop or the Corporate Entity operating your Shop. |
|---|---|---|---|
| o. | Franchisor's option to purchase franchisee's business | Not applicable | Not applicable. |
| p. | Death or disability of franchisee | 14.D. | If you are an individual, within 30 days of the death or permanent disability of Franchisee, your executor and/or legal representative must appoint an Operating Manager approved by us and within 60 days of such appointment the Operating Manager must complete, to our satisfaction, our initial training program. Within 12 months of the date of death or disability, the Franchise Agreement must be transferred to a transferee approved by us and otherwise transferred in accordance with the terms of the Franchise Agreement. If the franchisee is a Corporate Entity, within 30 days of the death or permanent disability of your Managing Owner, if there are other Owners, must appoint a replacement Operating Manager approved by us and within 60 days of such appointment the replacement Operating Manager must complete, to our satisfaction, our initial training program. |
| q. | Non-competition covenants during the term of the franchise | 6 | No involvement in any competitive business and must comply with confidentiality, non-disclosure and non-solicitation covenants. |
| r. | Non-competition covenants after the franchise is terminated or expires | 6, 17.C. | No involvement, ownership or interest whatsoever for 24 months in any competing business in: your Designated Territory; a 25-mile radius of your Designated Territory; a 10- mile radius of the Designated Territory of any other Shop; and you must comply with confidentiality, non-disclosure and non solicitation covenants. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–49)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, after the franchise is terminated or expires, franchisees are subject to non-competition covenants for 24 months. These covenants restrict involvement, ownership, or interest in any competing business within specific geographic areas.
The restricted areas include the franchisee's Designated Territory, a 25-mile radius of the franchisee's Designated Territory, and a 10-mile radius of the Designated Territory of any other Bang Cookies Shop. Additionally, franchisees must comply with confidentiality, non-disclosure, and non-solicitation covenants.
This means that a former Bang Cookies franchisee is significantly limited in their ability to operate or be involved with a competing business within these defined zones. The restrictions aim to protect Bang Cookies's market and confidential information. Prospective franchisees should carefully consider the implications of these post-termination restrictions, especially if they plan to remain in the same geographic area after leaving the Bang Cookies system. Understanding the exact definition of "Designated Territory" in the Franchise Agreement is crucial to assessing the practical impact of these non-compete obligations.