After termination of employment with a Baya Bar franchisee, what is the geographic restriction on a covenantor participating in a similar business to Baya Bar?
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 employment or association with a Baya Bar franchisee, is subject to certain restrictions regarding involvement with similar businesses. Specifically, for a period of 24 months after termination, the covenantor cannot participate as an owner, partner, director, officer, employee, or consultant in any café or business serving products similar to the Baya Bar system.
The geographic scope of this restriction extends to within five miles of the franchisee's territory or any Baya Bar location. This means that a former employee is barred from engaging with a competing business within that specified radius, regardless of whether it is directly competitive with the specific franchise they were associated with or any other Baya Bar outlet.
Baya Bar includes these restrictions to protect its goodwill, unique qualities, and confidential information. The FDD states that these covenants are considered reasonable in terms of time, geographical area, and scope of activity, ensuring they do not impose a greater restraint than necessary to protect Baya Bar's business interests. However, if any part of these restrictions is deemed unreasonable, adjustments will be made to ensure enforceability. Baya Bar also retains the right to modify the scope of any covenant without the covenantor's consent by providing written notice.