Are non-competition covenants applicable during the term of the Bang Cookies franchise for Multi-Unit Development Agreements?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| s. Modification of the agreement | 18.L. | Requires writing signed by you and us, except for unilateral changes that we may make to the Manuals or our unilateral reduction of the scope of a restrictive covenant that we may make in our discretion. | |
|---|---|---|---|
| t. Integration/merger clauses | 18.M. | Only the terms of the Franchise Agreement and schedules to the Franchise Agreement and the respective signed exhibits to the Franchise Agreement are binding, subject to state law. Nothing in any agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. | |
| u. Dispute resolution by arbitration or mediation | 18.G. | Except for certain claims for injunctive relief, all disputes must first be submitted to non-binding mediation in Bergen County, New Jersey and, if mediation is unsuccessful, then to binding arbitration in Bergen County, New Jersey. This provision is subject to applicable state law. | |
| v. Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings must be conducted in, or closest to, State court of general jurisdiction that is within or closest to Bergen County, New Jersey. This provision is subject to applicable state law. | |
| w. Choice of law | 18.F. | New Jersey law will govern. However, this provision is subject to state law and as otherwise disclosed in Exhibit I to this Disclosure 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. |
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 during the term of a Multi-Unit Development Agreement itself. However, this does not mean there are no non-compete obligations.
Each Bang Cookies shop developed under a Multi-Unit Development Agreement will be subject to the non-competition covenants outlined in its individual Franchise Agreement. Therefore, while the development agreement isn't directly subject to a non-compete, the actual operation of each Bang Cookies store will be.
This means that as a multi-unit developer, you won't be restricted from developing other businesses generally, but you and your operating managers will be restricted from operating competing businesses through each individual Bang Cookies franchise agreement. The specifics of these non-competition covenants, such as their scope and duration, would be detailed within each respective Franchise Agreement for each Bang Cookies location.