After termination of association with a Baya Bar franchisee, for how long is the covenantor restricted from participating in a similar business?
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.
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, a covenantor, upon termination of their employment or association with a franchisee, is restricted from participating in a similar business for twenty-four (24) months. This restriction prevents the covenantor from engaging as an owner, partner, director, officer, employee, or consultant in any café or business serving similar products to the Baya Bar system.
This non-compete agreement is designed to protect Baya Bar's confidential information, goodwill, and unique qualities. The restriction applies within five (5) miles of the franchisee's territory or any Baya Bar location. This measure ensures that former employees or associates do not leverage their knowledge of Baya Bar's operations to unfairly compete against existing franchisees or the franchisor.
Baya Bar also states that these covenants are considered reasonable in terms of time, geographical area, and scope. However, if any part of the restriction is deemed unreasonable, the terms will be adjusted to ensure enforceability. Furthermore, Baya Bar retains the right to reduce the scope of any covenant without the covenantor's consent by providing written notice.
This non-compete clause is a standard practice in franchising to safeguard the brand's market position and proprietary information. Prospective franchisees should carefully review these restrictions to understand their obligations and limitations should they or their employees leave the Baya Bar system.