Following a permitted transfer under the Ben Jerrys Development Agreement, for how long is the Developer restricted from engaging in a competitive business?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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; provided, however, that this provision shall not apply to the operation by DEVELOPER of any business under the System under a franchise with BEN & JERRY'S.
Should there be a change in the law which would render this Section 8.2 inoperative, then the parties authorize any judge to make any and all changes to ensure that the restraints for both time and geography are within the scope of the law.
- 8.3 Sections 8.1.3 and 8.2 shall not apply to ownership by DEVELOPER of a less than one percent (1%) beneficial interest in the outstanding equity securities of any corporation which has securities registered under the Securities Exchange Act of 1934.
Source: Item 23 — RECEIPTS (FDD pages 134–358)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, a Developer is subject to a non-compete covenant for two years following a permitted transfer under the Development Agreement. This means that for a continuous, uninterrupted period of two years after the date of the transfer, the Developer cannot engage in any business that is significantly involved in selling ice cream, sorbet, frozen yogurt, or other frozen desserts.
The restriction applies if the competitive business is located in the Development Area or within a five-mile radius of the Development Area or any Ben Jerrys Scoop Shop operating under the Ben Jerrys system. This prevents the Developer from immediately opening a competing ice cream business nearby and leveraging their knowledge and experience gained as a Ben Jerrys franchisee.
However, this non-compete clause does not prevent the Developer from operating another Ben Jerrys business under a franchise agreement with Ben Jerrys. Additionally, the restriction does not apply if the Developer owns less than a 1% beneficial interest in the equity securities of a corporation registered under the Securities Exchange Act of 1934. This exception allows for minor investments in publicly traded companies that may have some involvement in the frozen dessert industry without violating the non-compete agreement. The document also states that if the law changes to make this restriction inoperative, a judge is authorized to make changes to ensure the restraints for time and geography are within the scope of the law.