Under the Bang Cookies Franchise Agreement, what is the scope of the non-exclusive license granted to the Franchisee?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) During the Term of this Agreement and subject to the rights of Franchisor including, but not limited to, the Reserved Rights, Franchisor grants to Franchisee and Franchisee accepts, the nonexclusive license, right and obligation to develop and operate, one Bang Cookies Shop in conformity with the System and this Agreement from a single fixed shop location, selected by Franchisee but requiring the approval of Franchisor ("Franchisee's Shop Location") and, as designated by Franchisor in Franchisor's discretion and Reasonable Business Judgment, within a Designated Territory;
- (2) Unless otherwise expressly authorized in Schedule 1 to this Agreement, Franchisee's Shop must be established as a Bakery Location;
- (3) If, as of the Effective Date, Franchisee has selected a proposed Shop Location that Franchisor approves as Franchisee's Shop Location, then Franchisee's Shop Location and Designated Territory, if any, shall be identified in Schedule 1 of this Agreement. To be effective, Schedule 1 must be completed and
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchise agreement grants the franchisee a non-exclusive license to operate a Bang Cookies shop. This license allows the franchisee to develop and operate one Bang Cookies shop in accordance with the Bang Cookies system from a single, fixed location that must be approved by Bang Cookies. This location will be within a designated territory, as determined by Bang Cookies. Unless otherwise authorized, the shop must be established as a Bakery Location. If a shop location has been selected and approved by Bang Cookies as of the effective date, it will be identified in Schedule 1 of the agreement. Schedule 1 must be completed and signed by both parties to be effective.
However, this license is subject to several conditions and limitations. The rights granted are contingent upon the franchisee's adherence to all terms and conditions of the agreement and are subordinate to the rights Bang Cookies reserves for itself. Bang Cookies retains the right to operate or franchise others to operate Bang Cookies shops outside the franchisee's designated territory. They can also engage in business activities, including those that compete with the franchisee, as long as they do not use the Bang Cookies' Licensed Marks within the franchisee's territory.
Furthermore, Bang Cookies can use the Licensed Marks and System to distribute approved services and products through alternative channels of distribution, and operate Bang Cookies shops at Captive Markets, both within and outside the franchisee's designated territory. The franchisee may face competition from other Bang Cookies shops and franchisees, including those in close proximity or within Closed Markets. Bang Cookies is not obligated to prevent other franchisees from marketing within the franchisee's designated territory, and the franchisee will not receive compensation if Bang Cookies or another franchisee solicits customers from within their designated territory.
In summary, while the Bang Cookies franchise agreement grants a license to operate a Bang Cookies shop, it is non-exclusive and subject to significant limitations and reserved rights held by Bang Cookies. A prospective franchisee should carefully consider these limitations and the potential for competition when evaluating the opportunity.