factual

What is the effect of Bens Soft Pretzels unreasonably withholding consent to a transfer?

Bens_Soft_Pretzels Franchise · 2025 FDD

Answer from 2025 FDD Document

  • D. Noncompete Covenants. You agree that you will receive valuable training, Confidential Information and goodwill that you otherwise would not receive or have access to but for the rights licensed to you under this Agreement. You therefore agree to the following noncompetition covenants:
      1. Unless otherwise specified, the term "you" as used in this subparagraph 10.D includes, collectively and individually, all Owners, guarantors, officers, directors, members, managers, partners, as the case may be, and holders of any ownership interest in you and any immediate family members of same including spouses and children. We may require you to obtain from your manager and other individuals identified in the preceding sentence a signed non-compete agreement in a form satisfactory to us that contains the noncompete provisions of this subparagraph 10.D.
      1. You covenant that during the term of this Agreement or during any Interim Period you will not, except as we otherwise consent to in writing, and which consent shall be unreasonably withheld, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or entity, own, manage, operate, maintain, engage in, consult with or have any interest in any other store or food business other than the one authorized by this Agreement or any other agreement between us and you.
      1. You covenant that you will not, for a period of one year after the expiration or termination of this Agreement, or after the expiration of any Interim Period, regardless of the cause of termination, or within one year of the sale of the Store or any interest in you, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or entity, own, manage, operate, maintain, engage in, consult with or have any interest in a Competing Business:
      • a. At the premises of the former Store;
      • b. Within 5 miles of the Store; or
      • c. Within 5 miles of any other business or store using the BEN'S SOFT PRETZELS System, whether franchised or owned by us or our affiliates.

For purposes of this Section 10.D, a Competing Business includes any store or food business which includes the sale of pretzels where the sale of pretzels is more than 10% of the overall revenue of the business.

Source: Item 22 — CONTRACTS (FDD pages 46–47)

What This Means (2025 FDD)

Based on the 2025 Bens Soft Pretzels Franchise Disclosure Document, if Bens Soft Pretzels withholds consent to a noncompete agreement in subparagraph 10.D, such consent shall be unreasonably withheld.

Specifically, subparagraph 10.D outlines noncompete covenants that the franchisee agrees to, including restrictions during the term of the agreement and for one year after expiration or termination. These covenants prevent the franchisee from engaging in any competing business, defined as a store or food business where the sale of pretzels constitutes more than 10% of the overall revenue.

This clause protects Bens Soft Pretzels by ensuring franchisees do not use the training, confidential information, and goodwill gained from the franchise to directly compete with the system during the franchise term and for a limited period afterward. The inclusion of "unreasonably withheld" suggests that while Bens Soft Pretzels can deny consent, they must have a legitimate, justifiable reason for doing so, preventing arbitrary denial of a franchisee's ability to engage in other business ventures.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.