Can Bang Cookies unilaterally reduce the scope of a restrictive covenant?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. | We have the right to match any offer to purchase your Shop or the Corporate Entity operating your Shop. | |----|------------------------------------------------------------------------------|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | o. | Franchisor's option to purchase franchisee's business | Not applicable | Not applicable. | | p. | Death or disability of franchisee | 14.D. | If you are an individual, within 30 days of the death or permanent disability of Franchisee, your executor and/or legal representative must appoint an Operating Manager approved by us and within 60 days of such appointment the Operating Manager must complete, to our satisfaction, our initial training program. Within 12 months of the date of death or disability, the Franchise Agreement must be transferred to a transferee approved by us and otherwise transferred in accordance with the terms of the Franchise Agreement. If the franchisee is a Corporate Entity, within 30 days of the death or permanent disability of your Managing Owner, if there are other Owners, must appoint a replacement Operating Manager approved by us and within 60 days of such appointment the replacement Operating Manager must complete, to our satisfaction, our initial training program. | | q. | Non-competition covenants during the term of the franchise | 6 | No involvement in any competitive business and must comply with confidentiality, non-disclosure and non-solicitation covenants. | | r. | Non-competition covenants after the franchise is terminated or expires | 6, 17.C. | No involvement, ownership or interest whatsoever for 24 months in any competing business in: your Designated Territory; a 25-mile radius of your Designated Territory; a 10- mile radius of the Designated Territory of any other Shop; and you must comply with confidentiality, non-disclosure and non solicitation covenants. |
| s. | Modification of the agreement | 18.L. | Requires writing signed by you and us, except for unilateral changes that we may make to the Manuals or our unilateral reduction of the scope of a restrictive covenant that we may make in our discretion. |
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, Bang Cookies has the authority to unilaterally reduce the scope of a restrictive covenant. This means that Bang Cookies can, at its discretion, lessen the restrictions placed on a franchisee regarding certain business activities, without requiring the franchisee's explicit consent or a jointly signed agreement. However, any other modifications to the franchise agreement typically require a written agreement signed by both the franchisee and Bang Cookies.
This provision offers a degree of flexibility, potentially benefiting franchisees if Bang Cookies chooses to reduce restrictions that might be hindering their business operations. However, franchisees should be aware that Bang Cookies retains sole discretion in making these reductions.
It is important for prospective franchisees to fully understand the specific terms of the restrictive covenants outlined in the franchise agreement and how Bang Cookies might choose to modify them. Franchisees should seek clarification on what circumstances might prompt Bang Cookies to reduce the scope of these covenants and whether there are any limitations or conditions attached to this unilateral right.