Are non-competition covenants applicable to the Bang Cookies Multi-Unit Development Agreement itself?
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 not applicable to the Multi-Unit Development Agreement itself. However, it's important to note that each Bang Cookies shop developed under the Multi-Unit Development Agreement will be subject to the non-competition covenants outlined in its respective Franchise Agreement. This means that while the overarching development agreement doesn't restrict competition, each individual franchise location will have its own set of rules regarding competitive activities.
This distinction is crucial for potential multi-unit developers. While they aren't directly restricted by a non-compete at the development level, they must understand that each Bang Cookies location they open will carry its own non-compete obligations. These obligations could impact their ability to engage in similar businesses within specific geographic areas or for a certain period, as defined in each individual Franchise Agreement.
Therefore, a prospective Bang Cookies multi-unit franchisee should carefully review the non-competition terms within the standard Franchise Agreement to fully understand the restrictions that will apply to each shop they develop. They should also seek legal counsel to assess the implications of these covenants on their business plans and future opportunities.