After the Baya Bar agreement expires, what is the geographic restriction on franchisees or principals participating in a similar business to Baya Bar?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
19.5.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Franchisee and Principals, if any, shall not, either directly or indirectly, for themselves or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of the Franchised Business 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 café or business serving products similar to the System within five (5) miles of the Territory or any Baya Barlocation; 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 franchisees.
19.6 Reasonableness of Restrictions.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, following the expiration or termination of the Franchise Agreement, both the franchisee and any principals are subject to certain restrictions. Specifically, for a period of 24 months after the agreement ends, they cannot participate in a similar business.
This restriction prevents them from being an owner, partner, director, officer, employee, consultant, or agent in any café or business that serves similar products to the Baya Bar system. This restriction applies within a five-mile radius of either the franchisee's original territory or any other Baya Bar location.
This non-compete clause is designed to protect Baya Bar's market and goodwill by preventing former franchisees from leveraging their knowledge and experience to directly compete with the franchise shortly after their agreement concludes. Such clauses are common in franchising to maintain brand consistency and protect existing franchisees.
Baya Bar also states that the restrictions are reasonable in terms of time, geographical area, and scope, ensuring they do not impose a greater restraint than necessary to protect the goodwill or other business interests of the Franchisor. If any part of the restriction is deemed unreasonable, the franchisor has the right to reduce the scope to make it enforceable.