Under what conditions can Bang Cookies prohibit a franchisee from soliciting customers outside their Designated Territory?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
ution of the Shop Location Lease Agreement Rider attached to this Agreement as Exhibit 4, and Franchisee's agreement and execution of the Collateral Assignment of Lease attached to this Agreement as Exhibit 5;
- (7) Franchisee may only offer and sell the Approved Services and Products from Franchisee's Shop Location in accordance with the requirements set forth in the operations manual;
- (8) Franchisor, in Franchisor's Reasonable Business Judgment and for any reason or no reason at all, may prohibit Franchisee from soliciting customers located outside Franchisee's Designated Territory;
- (9) Except as otherwise provided in this Agreement including, but not limited to, the Reserved Rights, provided that, at all times Franchisee is and remains in compliance with all of the terms of this Agreement, during the Term of this Agreement, neither Franchisor nor any affiliate of Franchisor will establish or operate, or grant a franchise to any third party to establish or operate, a Shop using the Licensed Marks and System at a Shop Location that is located within Franchisee's Designated Territory, provided, that a Designated Territory has been designated and approved by Franchisor in accordance with the terms of this Agreement, but excluding Closed Markets. Franchisee may face competition from other Bang Cookies Shops and other System franchisees
with shop locations and/or designated territories, including Shops that are located within Closed Markets and/or located adjacent to and/or within a close proximity to Franchisee's Shop Location and/or Designated Territory. Franchisee agrees that although Franchisor may disapprove of any marketing medium that is distributed and/or reaches outside of Franchisee's Designated Territory, that Franchisor is not obligated to do so and that Franchisee may face competition from other Bang Cookies Shops and System franchisees that market and promote their Bang Cookies Shop through internet, mail, public relations, and other marketing activities and mediums that are distributed to or within Franchisee's Designated Territory. Franchisee agrees that Franchisee shall not receive any compensation whatsoever if Franchisor or another System franchisee solicits customers from within Franchisee's Designated Territory; and
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(10) The foregoing rights granted in this Article 2.A. are subject to and contingent upon each and every, term and condition of this Agreement, the rights of any prior user, and are non-exclusive and subordinate to the Reserved Rights.
2.B. TERM
Unless previously terminated pursuant to the terms of this Agreement, the term of this Agreement will be for a period of 10 consecutive years, commencing from the Effective Date (the "Term").
**2.C.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, Bang Cookies has the right to prohibit a franchisee from soliciting customers outside of their designated territory. This authority is based on Bang Cookies's reasonable business judgment, and the document specifies that this decision can be made for any reason or no reason at all.
This condition is further reinforced by the requirement that a franchisee's marketing efforts must be directly targeted to their designated territory. Franchisees are not allowed to intentionally target marketing to attract customers from outside their territory. If a franchisee's marketing efforts, even when targeted to their territory, inadvertently reach beyond it, Bang Cookies has the right to demand that the franchisee discontinue such marketing activities.
This policy has significant implications for prospective franchisees. It means that Bang Cookies retains considerable control over the franchisee's marketing strategies and reach. A franchisee's ability to grow their customer base may be limited by the boundaries of their designated territory and Bang Cookies's discretion. Franchisees need to be aware that Bang Cookies can restrict their marketing activities if they are seen as extending beyond their designated area, even if the franchisee believes those activities are beneficial for their business. This could potentially limit a franchisee's revenue and growth opportunities.
It is important for potential franchisees to fully understand the definition and scope of their designated territory, as well as Bang Cookies's criteria for exercising its reasonable business judgment in these matters. Franchisees should also inquire about any specific marketing restrictions or guidelines that may apply to their territory. Understanding these limitations is crucial for developing a realistic business plan and assessing the potential profitability of a Bang Cookies franchise.