What remedy is Bang Cookies entitled to if a franchisee violates the restrictive covenants and obligations outlined in Article 6?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
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
Franchisee agrees that Franchisee's failure and/or Franchisee's Owner(s) failure to comply with the restrictive covenants and obligations set forth in this Article 6 will cause irreparable harm to Franchisor and/or other Bang Cookies Shop franchisees for which there is no adequate remedy at law. Franchisee agrees that any violation of these Article 6 covenants and obligations by either Franchisee and/or any Owner(s) will entitle Franchisor to injunctive relief. Franchisee agrees that Franchisor may apply for such injunctive relief, without bond, but upon due notice, in addition to such further and other relief as may be available at equity or law, and the sole remedy of Franchisee, in the event of the entry of such injunction, will be the dissolution of such injunction, if warranted, upon hearing duly held (all claims for damages by reason of the wrongful issuance of a
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if a franchisee fails to comply with the restrictive covenants and obligations detailed in Article 6 of the franchise agreement, Bang Cookies is entitled to certain remedies. Bang Cookies states that such a failure will cause irreparable harm for which there is no adequate remedy at law.
Specifically, Bang Cookies is entitled to injunctive relief, which means they can seek a court order to stop the franchisee from continuing the violating behavior. Bang Cookies can apply for this injunctive relief without needing to post a bond, although they must provide due notice. If an injunction is issued, the franchisee's sole remedy is to seek the dissolution of the injunction. The franchisee also waives any claims for damages resulting from the wrongful issuance of such an injunction. However, if a court requires a bond, the amount is capped at $1,000.
These remedies are not exclusive, and Bang Cookies can combine them with other remedies available under the agreement, at law, or in equity. These include seeking specific performance (forcing the franchisee to fulfill their obligations) and recovering monetary damages. This comprehensive approach allows Bang Cookies to pursue multiple avenues to address breaches of the restrictive covenants and protect its interests and the interests of other franchisees.