After termination or non-renewal of a Bang Cookies franchise, is a franchisee required to abide by post-termination non-competition covenants and restrictions?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
otherwise disclosed in Exhibit I to this Disclosure Document. |
| i. | Franchisee's obligations on termination/non-renewal | 6, 17 | You must: pay all sums that you owe to us under the Franchise Agreement and all other agreements with us; cease owning and operating the Franchised Business; cease representing yourself as a franchisee of ours; permanently cease using and/or accessing the System, the Licensed Marks, our confidential information, the operations manual, the Business Management System, the Business Management System Data, and the System Supplies; return the operations manual and all confidential information to us in the original form provided to you and document the destruction of all electronic files related to same; completely de-identify the location and/or facility associated with the Franchised Business; as requested by us, transfer to us all data, telephone listings, digital media, accounts, web listings and websites associated with the Franchised Business; and abide by the post-termination non-competition covenants and restrictions. |
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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, franchisees are required to abide by post-termination non-competition covenants and restrictions. Specifically, a franchisee cannot have any involvement, ownership, or interest for 24 months in any competing business within their Designated Territory, a 25-mile radius of their Designated Territory, or a 10-mile radius of the Designated Territory of any other Bang Cookies shop. Additionally, franchisees must continue to comply with confidentiality, non-disclosure, and non-solicitation covenants.
This means that after the franchise agreement ends, a former Bang Cookies franchisee is restricted from operating or being involved with a competing cookie business within a defined geographic area for two years. This restriction aims to protect Bang Cookies's market share and confidential information.
These non-compete terms are fairly standard in the franchise industry to protect the brand and other franchisees in the system. However, the specific geographic radius and time period can vary. A prospective Bang Cookies franchisee should carefully consider the scope of these restrictions and how they might impact their future career options if they decide to leave the system. It is also worth noting that Bang Cookies may unilaterally reduce the scope of a restrictive covenant at their discretion.