Does the Ben Jerrys agreement allow for any exceptions to the non-compete covenants, and if so, how are they approved?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
OPER'S businesses (including any Scoop Shop directly or indirectly owned by DEVELOPER, DEVELOPER'S shareholders, owners, or subsidiaries of DEVELOPER) without the prior written consent of BEN & JERRY'S. Any purported assignment or Transfer without the written consent of BEN & JERRY'S shall be null and void and shall constitute a material breach of this Agreement for which BEN & JERRY'S may immediately terminate this Agreement without opportunity to cure.
- 7.3 DEVELOPER understands and acknowledges that it shall be reasonable for BEN & JERRY'S to condition its consent to a Transfer on, among other factors: (i) the requirement that the proposed Transfer under this Agreement is to be made in conjunction with a simultaneous transfer of all comparable interests held by the transferor under all the Franchise Agreements executed pursuant to this Agreement; and (ii) satisfaction by DEVELOPER or its affiliates of any or all of the conditions and requirements for transfers set forth in form of the Franchise Agreement that BEN & JERRY'S deems applicable to a proposed transfer under this Agreement.
8. COVENANTS
8.1 DEVELOPER specifically acknowledges that, pursuant to this Agreement, DEVELOPER will receive valuable, specialized training and confidential information, including information regarding site selection, methods and techniques of BEN & JERRY'S and the
System. DEVELOPER covenants that during the term of this Agreement, except as otherwise approved in writing by BEN & JERRY'S, DEVELOPER shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, affiliates, partnership, corporation, or other entity:
- 8.1.1 Divert or attempt to divert any present or prospective business or customer of any shop under the System 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 BEN & JERRY'S (or any of its affiliates), the Products, the Proprietary Marks or the System; or
- 8.1.2 Own, maintain, operate, engage in, be employed by, provide any assistance to, or have any more than a one percent (1%) interest in (as owner or otherwise) any business that is significantly engaged in the sale of ice cream, sorbet frozen yogurt and/or other frozen dessert items provided, however, that this provision shall not apply to the operation by DEVELOPER of any business under the System with a Franchise Agreement with BEN & JERRY'S. A business will be considered to be significantly engaged in the sale of ice cream, sorbet, frozen yogurt and/or other frozen dessert items if twenty percent (20%) or more of its Gross Sales (as defined in the Franchise Agreement) in any month are from ice cream, sorbet frozen yogurt and/or other frozen dessert items (a "Competitive Business").
- 8.2 DEVELOPER covenants that, except as otherwise approved in writing by BEN & JERRY'S, DEVELOPER shall not, for a continuous uninterrupted period of two (2) years commencing upon the date of: (a) a permitted transfer under the Development Agreement; (b) expiration of the Development Agreement; (c) termination of the Development Agreement (regardless of the cause for termination); (d) a final order of a duly authorized arbitrator, panel of arbitrators, or a court of competent jurisdiction (after all appeals have been taken) with respect to any of the foregoing or with respect to enforcement of this Section 8; or (e) any or all of the foregoing; either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, affiliate, partnership, corporation or other entity, own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in (as owner or otherwise) any business that is significantly engaged in the sale of ice cream, sorbet, frozen yogurt and/or other frozen dessert items; and is, or is intended to be, located in the Development Area, within a five (5) mile radius of the Development Area or of any Scoop Shop operating under the System;
Source: Item 23 — RECEIPTS (FDD pages 134–358)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, there are exceptions to the non-compete covenants within the Development Agreement. During the term of the agreement, the developer is restricted from engaging in any business that significantly sells ice cream, sorbet, frozen yogurt, or other frozen dessert items. A business is considered significantly engaged if 20% or more of its gross sales in any month come from these items. However, this restriction does not apply if Ben Jerrys approves it in writing or to the operation of any business under the Ben Jerrys system with a Franchise Agreement with Ben Jerrys.
After the agreement concludes, the developer is restricted for two years from owning, maintaining, operating, or having an interest in any business significantly engaged in selling ice cream, sorbet, frozen yogurt, or other frozen dessert items within a five-mile radius of the Development Area or any operating Scoop Shop. This restriction applies after a permitted transfer, expiration, or termination of the Development Agreement, or after a final order from an arbitrator or court. However, this post-term restriction does not apply to the operation by the DEVELOPER of any business under the System under a franchise with BEN & JERRY'S.
Additionally, the non-compete covenants do not apply to the ownership of less than one percent (1%) of the equity securities of any corporation registered under the Securities Exchange Act of 1934. Any exceptions to these covenants must be approved in writing by Ben & Jerrys. Failure by Ben & Jerry's to provide approval or consent in writing constitutes a denial. Ben & Jerry's also makes no warranties or guarantees and assumes no liability by providing any waiver, approval, consent, or suggestion.