Can the Baya Bar franchisor approve a developer to participate in a business that would otherwise be a violation of the non-compete agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the franchisor can approve a developer's participation in a business that would otherwise violate the non-competition covenants. Specifically, the FDD states that the developer covenants not to participate in certain competitive activities, "except as otherwise approved in writing by Franchisor".
This means that a Baya Bar developer can seek written approval from the franchisor to engage in activities that would typically be prohibited under the non-compete agreement. This provides some flexibility for developers who may have other business interests or opportunities that could potentially conflict with the franchise agreement. However, approval is not guaranteed and is at the discretion of the franchisor.
The non-competition covenants outline specific restrictions during the term of the agreement, such as not diverting business from Baya Bar outlets, not participating in similar retail or café businesses featuring acai or smoothies, and not performing any act injurious to the goodwill associated with the Baya Bar brand. These restrictions also apply for a period of twenty-four months after the agreement expires or is terminated, within a five-mile radius of the Development Area or any Baya Bar location. Therefore, it is important for a prospective franchisee to fully understand the scope of these restrictions and the process for seeking written approval from Baya Bar for any potentially conflicting activities.