What is the geographic scope of the restriction on engaging in a competitive business after the termination of the Ben Jerrys Development Agreement?
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 restricted from engaging in a competitive business within a specific geographic area for two years after certain events. These events include a permitted transfer, expiration, or termination of the Development Agreement. This restriction also applies following a final order from an arbitrator or court regarding these events or the enforcement of this restriction.
The geographic scope of this restriction includes the Development Area itself, as well as any area within a five-mile radius of the Development Area. It also extends to any area within a five-mile radius of any Ben & Jerrys Scoop Shop operating under the Ben & Jerrys system. This means a developer cannot own, operate, or be involved with a business significantly engaged in selling ice cream, sorbet, frozen yogurt, or other frozen desserts within these areas.
However, this restriction does not prevent a developer from operating another Ben & Jerrys business under a separate franchise agreement with Ben & Jerrys. Additionally, the restriction does not apply if the developer owns less than 1% of the equity securities of a corporation registered under the Securities Exchange Act of 1934. This clause aims to prevent franchisees from leveraging their knowledge of the Ben & Jerrys system to directly compete with the franchise within a defined area and timeframe.