What is the duration of the non-compete agreement for a covenantor after termination of employment with a Baya Bar franchisee?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
b. In further consideration for the disclosure to Covenantor of the Confidential Information and to protect the goodwill and unique qualities of the System, Covenantor further agrees and covenants that, upon the termination of Covenantor's employment or association with Franchisee and continuing for twenty-four (24) months thereafter, Covenantor shall not, for Covenantor 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 Baya Bar System to any competitor, by direct or indirect inducement or otherwise, or
(ii) participate as an owner, partner, director, officer, employee, or consultant or serve in any other managerial, operational or supervisory capacity in any café or business serving products similar to the System within the within five (5) miles of Franchisee's Territory or any Baya Bar location.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a covenantor (employee) is subject to a non-compete agreement for 24 months after their employment or association with a Baya Bar franchisee ends. During this period, the covenantor is restricted from engaging in activities that could divert business from the Baya Bar franchise or other franchisees within the system.
Specifically, the covenantor cannot participate as an owner, partner, director, officer, employee, or consultant in any café or business that serves products similar to the Baya Bar system. This restriction applies within a five-mile radius of the franchisee's territory or any Baya Bar location. The non-compete aims to protect Baya Bar's goodwill and unique qualities by preventing former employees from using confidential information gained during their employment to compete against the franchise.
Baya Bar emphasizes the reasonableness of these restrictions, stating that they are necessary to protect the franchisor's business interests. However, the agreement also includes a provision that allows for the modification of the time period or geographic scope if deemed unreasonable in any legal proceeding. In such cases, the restrictions may be reduced to a level that is considered enforceable. Furthermore, Baya Bar retains the right to unilaterally reduce the scope of any covenant within the agreement, providing flexibility in enforcing the non-compete provisions.
Prospective franchisees should be aware of these non-compete terms, as they impact not only the franchisee but also their employees. Franchisees are responsible for ensuring that their employees comply with the terms of the Confidentiality and Non-Compete Agreement. This includes making sure that employees understand the restrictions and obligations outlined in the agreement, as any breach could result in legal action and potential damages to the Baya Bar system.