Are there non-competition covenants after the Bang Cookies franchise is terminated or expires for a Multi-Unit Development Agreement?
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, the Multi-Unit Development Agreement itself does not contain non-competition covenants that apply after the agreement is terminated or expires. However, any individual 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 development agreement has no post-termination restrictions, each shop opened under that agreement will.
This distinction is important for potential multi-unit franchisees. The Multi-Unit Development Agreement governs the development schedule and territory, while the individual Franchise Agreements govern the operation of each Bang Cookies shop. Therefore, a franchisee needs to carefully review the non-competition terms within the standard Franchise Agreement for each shop they develop.
It is typical in franchising to have post-term non-compete clauses to protect the brand's market share and confidential information. The Bang Cookies Franchise Agreement will likely contain restrictions on operating a similar business within a certain geographic area for a specified time after the franchise ends. A prospective franchisee should carefully review Item 17 of the Franchise Agreement for each shop to understand the specific terms and how they might impact future business opportunities after leaving the Bang Cookies system.