What happens to the goodwill associated with a Baya Bar franchise upon termination of the agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
19.5.1 During the term of this Agreement, Franchisee and each Principal, 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; (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; 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 or Franchisor-affiliated outlets.
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.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, franchisees must not perform any actions that could be detrimental to the goodwill associated with the Baya Bar system during the term of the agreement. This includes refraining from diverting customers to competitors or interfering with the business of the franchisor or other Baya Bar franchisees.
Upon termination or expiration of the franchise agreement, the franchisee is still obligated to protect the goodwill of the Baya Bar brand. For twenty-four months after the agreement ends, the franchisee cannot divert business or customers to competitors, participate in similar businesses within five miles of the territory or any Baya Bar location, or perform any action that could harm the goodwill associated with the Baya Bar system.
These restrictions are designed to protect the Baya Bar brand and prevent former franchisees from using their knowledge and experience gained during the franchise term to unfairly compete with the franchisor or other franchisees. This is a common practice in franchising to maintain brand consistency and protect the value of the franchise system. Franchisees should be aware of these post-termination obligations and factor them into their business decisions.