Does Bang Cookies reserve the right to operate a franchised business outside a franchisee's designated territory?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor on behalf of itself, its affiliates and its assigns retains all rights, on any and all terms and conditions that Franchisor deems advisable and without any compensation or consideration to Franchisee to engage in the following activities (the "Reserved Rights"): (a) operate and grant to others the right to operate a Franchised Business, Bang Cookies Shop and/or other shops using the System and Licensed Marks at locations outside Franchisee's Designated Territory; (b) acquire or merge with or otherwise affiliate with one or more businesses of any kind, including businesses that are Competitive Businesses, and after such acquisition, merger or affiliation to own and operate and to franchise or license others to own and operate and to continue to own and operate such businesses, including Competitive Businesses (but not utilizing the Licensed Marks) within Franchisee's Designated Territory; (c) be acquired by or merge with or otherwise affiliate with one or more businesses of any kind, including businesses that are Competitive Businesses, even if such business or businesses presently or, in the future, own and operate and franchise or license others to own and operate such businesses, including Competitive Businesses (but not utilizing the Licensed Marks) within Franchisee's Designated Territory; (d) use the Licensed Marks and System to distribute the Approved Services and Products or products and services similar to the Approved Services and Products in Alternative Channels of Distribution within or outside Franchisee's Designated Territory; (e) operate and grant to others the right to operate a Bang Cookies Shop at Captive Markets, both within and outside Franchisee's Designated Territory; and (f) use the Licensed Marks and System and to license others to use the Licensed Marks and System to engage in all other activities not expressly prohibited by this Agreement. Franchisor reserves the right to offer Franchisee(s) the right to service and or be an approved supplier of other franchisees in and outside the Territory, provided, that Franchisee agreed to the Franchisor provided terms.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, Bang Cookies retains specific rights regarding the operation of franchised businesses. Bang Cookies reserves the right to operate and grant others the right to operate a franchised Bang Cookies shop using the Bang Cookies system and licensed marks at locations outside a franchisee's designated territory. This means that even if a franchisee has an exclusive territory, Bang Cookies can still establish or allow others to establish Bang Cookies shops outside of that territory.
Bang Cookies also retains the right to use the licensed marks and system to distribute approved services and products, or similar products and services, through alternative channels of distribution, whether within or outside a franchisee's designated territory. Additionally, Bang Cookies can operate and grant others the right to operate Bang Cookies shops at captive markets, both within and outside the franchisee's designated territory. These "Reserved Rights" give Bang Cookies considerable latitude to operate and expand its brand through various channels and locations, irrespective of any individual franchisee's territory.
This reservation of rights has significant implications for prospective Bang Cookies franchisees. While a franchisee may be granted a designated territory, this does not guarantee complete protection from competition. Bang Cookies' ability to operate or franchise others outside the designated territory, use alternative distribution channels, and establish shops in captive markets could lead to direct or indirect competition for the franchisee. Therefore, prospective franchisees should carefully consider these reserved rights and their potential impact on their business before investing in a Bang Cookies franchise.