After the Better Blend Franchise Agreement expires or is terminated, what is the geographic radius around the Franchisee's Territory where the Guarantor is restricted from being involved with a Competitor?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor located within five miles of Franchisee's Territory or within five miles of the territory of any other Better Blend business operating on the date of expiration, termination, or transfer, as applicable.
If the Franchise Agreement is terminated before the Territory is determined, then the area of non-competition will be the Site Selection Area and within five miles the territory of any other Better Blend business operating on the date of termination.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to the 2024 Better Blend Franchise Disclosure Document, for two years after the Franchise Agreement expires or is terminated, the Guarantor is restricted from involvement with any Competitor within five miles of the Franchisee's Territory. This restriction also applies within five miles of any other Better Blend business operating on the date of expiration or termination. This includes having any ownership interest, lending money, providing financial assistance, providing services, or being employed by a Competitor.
If the Franchise Agreement is terminated before the Franchisee's Territory is determined, the non-competition area will be the Site Selection Area and within five miles of any other Better Blend business operating at the time of termination. If a Better Blend business does not have a defined territory, its territory will be considered a 3-mile radius for the purposes of this non-compete clause.
The Guarantor's obligations extend beyond simply avoiding direct competition. They also include refraining from providing financial support or services to competing businesses within the specified radius. This broad definition aims to prevent any indirect involvement that could undermine Better Blend's market position.
It's important for prospective franchisees and their guarantors to fully understand these post-term covenants, as they can significantly impact future business opportunities. Franchisees should carefully consider the implications of these restrictions, especially if they have existing business interests or plan to engage in related ventures after the franchise agreement ends. Franchisees should also note that failure to comply with these obligations extends the restrictive period by an additional day for each day of noncompliance.