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Are there non-competition covenants during the term of the Bang Cookies franchise for a Multi-Unit Development Agreement?

Bang_Cookies Franchise · 2024 FDD

Answer from 2024 FDD Document

| g | "Cause" defined-curable | Not | Not applicable. | |----|----------------------------------------------------------------------------|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | defaults | applicable | | | h. | "Cause" defined-non curable defaults | 3.2 | Your Multi-Unit Development Agreement can be terminated by us if: (a) you abandon your obligations under the Multi Unit Development Agreement; (b) if you for four consecutive months, or any shorter period that indicates an intent by you to discontinue your development of Shops within the Development Area; (c) if you become insolvent or you are adjudicated bankrupt, or if any action is taken by you, or by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; (d) if you fail to meet your development obligations under the Development Schedule for any single Development Period including, but not limited to, your failure to establish, open and/or maintain the cumulative number of Shops in accordance with Development Schedule; and/or (e) in the event that any one Franchise Agreement is terminated respecting any Shop and/or any other Franchise Agreement with us. | | i. | Franchisee's obligations on termination/non-renewal | Not applicable | You lose all rights under the Multi-Unit Development Agreement. There are no renewal rights respecting the Multi Unit Development Agreement. | | j. | Assignment of the contract by franchisor | 6 | There are no restrictions on our right to assign. | | k. | "Transfer" by franchisee definition | 6 | You have no right to transfer the Multi-Unit Development Agreement. | | l. | Franchisor's approval of transfer by franchisee | 6 | You have no right to transfer the Multi-Unit Development Agreement. | | m. | Conditions for franchisor's approval of transfer | 6 | You have no right to transfer the Multi-Unit Development Agreement. | | n. | Franchisor's right of first refusal to acquire franchisee's business | Not applicable | Not applicable. | | o. | Franchisor's option to purchase franchisee's business | Not applicable | Not applicable. | | p. | Death or disability of franchisee | Not applicable | Not applicable. |

| 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, the Multi-Unit Development Agreement itself does not have non-competition covenants during the term. However, this does not mean there are no non-competition restrictions.

Each Bang Cookies shop developed under the Multi-Unit Development Agreement will be subject to the non-competition covenants outlined in its individual Franchise Agreement. Therefore, while the development agreement doesn't directly impose these covenants, they apply at the store level once each franchise location is established.

This means a franchisee with a Multi-Unit Development Agreement needs to carefully review the non-competition terms within the standard Franchise Agreement for each shop they develop. These terms will dictate what activities are restricted during the franchise term for each Bang Cookies location.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.