Following termination of association with a Baya Bar franchisee, what is the geographic restriction preventing a covenantor from participating in a similar business?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
- 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.
- c. The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
- d. If the period of time or the geographic scope specified Section 2.b. above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, a covenantor is restricted from participating in a similar business within a specific geographic area following the termination of their association with a Baya Bar franchisee. Specifically, for a period of twenty-four months after termination, the covenantor cannot participate as an owner, partner, director, officer, employee, or consultant in any café or business serving similar products.
The geographic scope of this restriction extends to within five miles of the former franchisee's territory or any Baya Bar location. This means that a former employee or associate is barred from engaging with competing businesses within this radius, regardless of whether it is the original franchise location or another Baya Bar outlet.
This non-compete clause is designed to protect Baya Bar's goodwill and confidential information. The FDD states that these restrictions are considered reasonable in terms of time, geographical area, and scope of activity. However, if any part of the restriction is deemed unreasonable, the terms will be adjusted to be enforceable. Baya Bar also retains the right to reduce the scope of the covenant without the covenantor's consent by providing written notice.