What constitutes a violation of the non-compete agreement by a Better Blend franchisee, leading to a non-curable default?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise | Summary |
|---|---|---|
| h. “Cause” defined--non- | FA: Misrepresentation when applying to be a | |
| curable defaults | franchisee; knowingly submitting false | |
| information; bankruptcy; fail to open by | ||
| specified deadline; lose possession of your | ||
| location; violation of law; violation of | ||
| confidentiality; violation of non-compete; | ||
| violation of ethics and values; violation of | ||
| transfer restrictions; slander or libel of us; | ||
| refusal to cooperate with our business | ||
| inspection; cease operations; operate in a | ||
| manner dangerous to health or safety (if not | ||
| corrected within 48 hours); score below 90/A | ||
| on government health inspections more than | ||
| twice in 36 months; score below passing grade | ||
| on brand inspection more than twice in 36 | ||
| months; three defaults in 12 months; cross- | ||
| termination; | ||
| a felony, or commission or accusation of an act | ||
| that is reasonably likely to materially and | ||
| unfavorably affect our brand; any other breach | ||
| q. Non-competition | Neither you, any owner of the business, or any | |
| covenants during the term | ||
| of the franchise | spouse of an owner may have ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by, any competitor. | |
| r. Non-competition | For two years, neither you, any owner of the | |
| covenants after the | ||
| franchise is terminated or | ||
| expires | business, or any spouse of an owner may have ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by a competitor located within five miles of your former territory (or of your site selection area if no territory had been set) or of the territory of any other Better Blend business operating on the date of termination or expiration. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–38)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, violating the non-compete agreement is considered a non-curable default, which can lead to the termination of the franchise agreement. This means that if a franchisee breaches the non-compete terms, Better Blend does not have to provide an opportunity to correct the violation before terminating the agreement.
The non-compete covenants apply both during the term of the franchise and after its termination or expiration. During the franchise term, neither the franchisee, any owner of the business, nor any spouse of an owner may have ownership interest in, lend money or provide financial assistance to, provide services to, or be employed by any competitor. After the franchise is terminated or expires, these restrictions continue for two years within a five-mile radius of the former Better Blend location or any other Better Blend business operating at the time of termination or expiration.
These non-compete provisions are fairly standard in franchising to protect the brand and market share. However, the immediate termination without a chance to cure is a significant risk for franchisees. Prospective franchisees should carefully consider these restrictions and ensure they fully understand the implications before investing in a Better Blend franchise. It is advisable to seek legal counsel to review the franchise agreement and non-compete terms.