What does the Bang Cookies franchisee agree to regarding the reasonableness of the restrictive covenants and obligations in Article 6?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
6.G. REASONABLENESS OF RESTRICTIVE COVENANTS AND OBLIGATIONS
Franchisee agrees that: (a) the terms of this Article 6 are reasonable both in time and in scope of geographic area; and (b) Franchisee has sufficient resources and business experience and opportunities to earn an adequate living while complying with the terms of this Article 6. Franchisee hereby waives any right to challenge the terms of this Article 6 as being overly broad, unreasonable or otherwise unenforceable. Although Franchisee and Franchisor both believe that the restrictive covenants and obligations of this Article 6 to be reasonable in terms of scope, duration and geographic area, Franchisor may at any time unilaterally modify the terms of this Article 6 (provided that such modification is in writing and signed by Franchisor) by limiting the scope of the Prohibited Activities, narrowing the definition of a Competitive Business, shortening the duration of the Post-Term Restricted Period, reducing the geographic scope of the Restricted Territory and/or reducing the scope of any other covenant imposed upon Franchisee under this Article 6 to ensure that the terms and covenants are enforceable under applicable law.
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6.H. BREACH OF RESTRICTIVE COVENANTS AND OBLIGATIONS
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, franchisees agree to the reasonableness of the terms outlined in Article 6, which covers restrictive covenants and obligations. Specifically, the franchisee acknowledges that these terms are reasonable in both time and geographic scope. They also confirm they possess sufficient resources, business experience, and opportunities to earn a living while adhering to these terms.
Most significantly, the franchisee waives their right to challenge the terms of Article 6, agreeing not to argue that they are overly broad, unreasonable, or unenforceable. This waiver is a critical point, as it limits the franchisee's legal recourse regarding these restrictions.
However, Bang Cookies retains the right to unilaterally modify the terms of Article 6 to ensure enforceability under applicable law. These modifications must be in writing and signed by Bang Cookies, and may include limiting the scope of prohibited activities, narrowing the definition of a competitive business, shortening the post-term restricted period, reducing the geographic scope of the restricted territory, or reducing the scope of any other covenant imposed upon the franchisee. This clause provides Bang Cookies with flexibility to adjust the restrictions while maintaining their overall intent.
This agreement has significant implications for prospective franchisees. By waiving their right to challenge Article 6, franchisees accept a potentially broad set of restrictions on their activities during and after the franchise term. While Bang Cookies can modify these terms to ensure enforceability, the initial waiver places a considerable burden on the franchisee to comply with the restrictions as they are initially presented.