Can a Bang Cookies franchisee use the Intellectual Property for purposes other than operating the Franchised Business?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
ranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.C. RESTRICTIVE COVENANTS: CONFIDENTIAL INFORMATION
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Confidential Information in any business or capacity other than the Bang Cookies Shop operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any Confidential Information; (d) shall take such reasonable steps as Franchisor may ask of Franchisee from time to time to prevent unauthorized use or disclosure of the Confidential Information; and (e) shall stop using the Confidential Information immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) 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; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Confidential Information was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
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;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, franchisees are explicitly restricted from using Confidential Information, which is part of the Intellectual Property, in any business or capacity other than the Bang Cookies Shop they operate. This restriction applies both during the term of the Franchise Agreement and after its expiration or termination. Franchisees must also maintain the confidentiality of the Confidential Information at all times and prevent unauthorized use or disclosure. Upon termination of the agreement, the franchisee must immediately stop using the Know-How. These obligations extend not only to the franchisee but also to their Owners, Spouses, directors, officers, employees, and agents, ensuring a comprehensive protection of Bang Cookies' proprietary assets.
This means that a Bang Cookies franchisee cannot leverage the brand's recipes, marketing strategies, or operational methods for any other business venture. For example, a franchisee cannot open an independent bakery using Bang Cookies' recipes or use the Bang Cookies logo to promote a different business. This is a standard practice in franchising to protect the brand's unique identity and competitive advantage.
The agreement requires franchisees to take reasonable steps to prevent unauthorized use or disclosure of confidential information, and Bang Cookies may specify what steps are considered reasonable. Furthermore, Bang Cookies requires franchisees to ensure that their employees and agents also adhere to these confidentiality obligations, typically through a confidentiality agreement. This ensures that anyone with access to Bang Cookies' confidential information is legally bound to protect it.
These restrictions are designed to safeguard Bang Cookies' Intellectual Property and maintain the integrity of the brand. Prospective franchisees should carefully consider these limitations and ensure they are comfortable with the scope of the restrictions before investing in a Bang Cookies franchise. Franchisees need to be aware that any violation of these terms could result in legal action and termination of the franchise agreement.