Under the Bb.Q Chicken franchise agreement, do the obligations of the franchisee or its principals that contemplate performance after a transfer of interest survive that transfer?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
10.3.2 With respect to you and each Principal, and for a continuous uninterrupted period commencing upon the expiration, termination of, or transfer of all of your or any Principals' interest in, this Agreement and continuing for two (2) years thereafter, except as otherwise approved in our sole and absolute discretion, neither you, nor any of the Principal(s) shall, directly or indirectly, for themselves, or through, on behalf of or in conjunction with any person, persons, partnership, or corporation:
(a) Divert, or attempt to divert, any business or customer of the Franchised Business hereunder to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any bb.q Chicken franchisees or Franchisor-affiliated outlets.
(b) Own, maintain, operate, engage in, or have any financial or beneficial interest in (including any interest in corporations, partnerships, trusts, unincorporated associations or joint ventures), advise, assist or make loans to any Competitive Business, which business is, or is intended to be, located within a one-half (0.5) mile radius of the location of any Franchised Business in the System.
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, both the franchisee and its principals have obligations that extend beyond the transfer of interest in the franchise agreement. Specifically, for a period of two years after the transfer, the franchisee and principals are restricted from engaging in activities that could harm the Bb.Q Chicken brand or compete with existing franchises.
This includes a non-compete clause that prevents them from diverting business from the franchised location to competitors, or from operating or having a financial interest in a competitive business within a 0.5-mile radius of any Bb.Q Chicken franchise. These restrictions are designed to protect the goodwill and business interests of Bb.Q Chicken and its franchisees.
The franchise agreement specifies that these covenants are considered reasonable in terms of time, geographical area, and scope, ensuring they do not impose unnecessary restraints. The agreement also states that each covenant is independent, and if any part is deemed unenforceable, the parties agree to be bound by a lesser covenant that imposes the maximum duty permitted by law. This ensures that some level of restriction remains in place, even if the original terms are modified by a legal decision.