Why are the restrictions on transfer imposed on Bb.Q Chicken franchisees considered reasonable?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.3.3 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 our goodwill or other business interests.
The parties agree that each of the covenants herein shall be construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which we are a party, you and the Principal(s) expressly agree to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to the 2025 Bb.Q Chicken Franchise Disclosure Document, the transfer restrictions are deemed reasonable to protect the brand's goodwill and business interests. Specifically, section 10.3.3 states that the non-compete covenants are reasonable limitations with respect to time, geographical area, and scope of activity. These restrictions ensure that a departing franchisee or their principals do not unfairly compete with Bb.Q Chicken or its other franchisees.
The FDD states that these covenants prevent franchisees from diverting business or customers to competitors, engaging in activities that harm the goodwill associated with the Bb.Q Chicken brand, or interfering with the business of the franchisor or other franchisees. The restrictions apply for a period of two years following the termination, expiration, or transfer of the franchise agreement. During this time, the franchisee or their principals are restricted from owning, operating, or having a financial interest in a competitive business within a 0.5-mile radius of any Bb.Q Chicken location.
Bb.Q Chicken emphasizes the importance of these restrictions by including a clause that if any part of the covenant is deemed unreasonable, the franchisee agrees to be bound by a lesser covenant that imposes the maximum duty permitted by law. This demonstrates the franchisor's intent to protect its business interests while remaining within legal boundaries. These measures are typical in franchising to maintain brand consistency and prevent unfair competition, ensuring the continued success and reputation of the Bb.Q Chicken system.