Can a Baya Bar developer disrupt the business of the Franchisor-affiliated outlets?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
ining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Developer is entering into this Agreement. In consideration for such specialized training, trade secrets, Confidential Information and rights, Developer covenants that, except as otherwise approved in writing by Franchisor:
- 8.3.1 During the term of this Agreement, 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 the Developer's Baya Bar outlets or of other developers or franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (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; 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 or Franchisor-affiliated outlets.
- 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.
- 8.4 Reasonableness of Restrictions. Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a developer is restricted from disrupting the business of Franchisor-affiliated outlets. During the term of the Development Agreement, the developer cannot divert business from Baya Bar outlets or other franchisees to competitors, participate in similar retail businesses featuring acai or smoothies, or perform any act that could harm the goodwill associated with the Baya Bar brand. Specifically, the developer is prohibited from interfering with, disturbing, disrupting, decreasing, or jeopardizing the business of the Franchisor or any Baya Bar developers or franchisees or Franchisor-affiliated outlets.
These restrictions also extend beyond the term of the Development Agreement. For twenty-four months after the agreement expires or is terminated, the developer is prohibited from engaging in similar competitive activities within five miles of the Development Area or any Baya Bar location. This includes diverting business, participating in competing businesses, or taking actions that could harm the Baya Bar brand or disrupt the business of the Franchisor or its franchisees.
The FDD emphasizes that these non-compete covenants are considered fair and reasonable, given the specialized training, trade secrets, and confidential information the developer receives. The document also states that Baya Bar would suffer immediate and irreparable injury if these covenants are violated, and the developer consents to injunctive relief to prevent any such violations. The developer also agrees that any claims they may have against Baya Bar will not be a defense against the enforcement of these covenants.