If the non-compete period for Baya Bar is deemed unreasonable, how will it be adjusted?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement or any portion thereof, without Covenantor's or Franchisee's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the non-compete agreement contains provisions for adjustments if any part of it is deemed unreasonable. Specifically, if the time period or geographic scope of the non-compete is considered unreasonable, the agreement stipulates that the period will be reduced by a certain number of months, or the geographic scope will be lessened by eliminating a portion of it. The aim is to ensure the restrictions are enforceable for a time and scope that is considered reasonable by the relevant jurisdiction.
Baya Bar also retains the right to modify the scope of any covenant within the agreement. This can be done at the sole discretion of Baya Bar, without needing consent from the franchisee or covenantor. Notice of such changes will be provided in writing, and the franchisee or covenantor is expected to comply with the modified covenant immediately upon receiving the notice.
This clause provides Baya Bar with flexibility in enforcing the non-compete agreement, allowing them to make necessary adjustments to ensure its enforceability while still protecting their business interests. For a potential franchisee, this means the initial terms of the non-compete may not be the final terms, as Baya Bar can modify them. It is important for franchisees to understand that the franchisor can unilaterally change the non-compete agreement, and it is crucial to seek legal advice to fully understand the implications of these clauses.