After the Baya Bar agreement expires, can a Baya Bar Developer interfere with the business of other Baya Bar franchisees?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of Developer's Baya Bar outlets or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any retail or café business featuring acai or similarly prepared smoothies or bowls within five (5) miles of the Development Area or any Baya Bar location; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Baya Bar developers or franchisees.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a Baya Bar Developer is restricted from interfering with the business of other Baya Bar franchisees for a period of 24 months after the expiration or termination of their agreement. Specifically, the Developer cannot divert business or customers to a competitor, participate in a competing retail or café business featuring similar products within five miles of the Development Area or any Baya Bar location, or take any action that harms the goodwill associated with the Baya Bar brand. They are also prohibited from disrupting or jeopardizing the business of the Franchisor or any Baya Bar developers or franchisees.
These non-compete covenants are in place because the Developer gains valuable training, trade secrets, and confidential information during the agreement, giving them a competitive advantage. Baya Bar considers these restrictions fair and reasonable, assuming the Developer has other skills and experience to derive income from other endeavors. This is a standard practice in franchising to protect the brand and other franchisees from unfair competition by someone who has inside knowledge of the business operations.
However, if any of these restrictions regarding time or geographic scope are deemed unreasonable, they can be reduced by the appropriate amount of time or eliminated geographically to make them enforceable. Baya Bar also retains the right to reduce the scope of any covenant without the Developer's consent by providing written notice.
If a Developer violates these non-compete agreements, Baya Bar is entitled to seek an injunction to immediately stop the prohibited conduct, as a violation would cause immediate and irreparable harm for which monetary compensation would not be adequate. The existence of any claims the Developer may have against Baya Bar does not serve as a defense against the enforcement of these covenants.