Are non-competition covenants applicable after the Bang Cookies franchise is terminated or expires for Multi-Unit Development Agreements?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| q. | Non-competition covenants during the term of the franchise | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
|---|---|---|---|
| r. | Non-competition covenants after the franchise is terminated or expires | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
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, non-competition covenants are generally not applicable to the Multi-Unit Development Agreement itself after termination or expiration. However, this does not mean there are no post-termination restrictions. Each Bang Cookies shop developed under the Multi-Unit Development Agreement will be subject to the non-competition covenants outlined in its individual Franchise Agreement.
In practical terms, while the development agreement allowing a franchisee to open multiple units might not have its own non-compete that survives termination, the non-compete tied to each individual Bang Cookies store remains in effect. This means that even after the development agreement ends, the franchisee is still restricted from engaging in competitive activities within the scope defined in each Franchise Agreement for a specific shop.
This distinction is important for prospective multi-unit franchisees to understand. The termination of the development agreement does not automatically release them from all non-compete obligations. They must carefully review the non-competition terms within each individual Franchise Agreement for each Bang Cookies location they operate to fully understand the restrictions that will apply after the franchise relationship ends.