What happens to the non-competition obligations of a Better Blend franchisee upon termination of the franchise agreement?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall 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 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 this Agreement is terminated before the Territory is determined, then the area of non-competition will be the Site Selection Area and within five miles territory of any other Better Blend business operating on the date of termination. If a given Better Blend business does not have a defined territory, then for purposes of this Section its territory will be deemed to be a 3-mile radius.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of BBF. Franchisee agrees that the existence of any claim it may have against BBF shall not constitute a defense to the enforcement by BBF of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, franchisees and other restricted parties are subject to non-compete obligations for two years after the franchise agreement expires or is terminated. This prevents them from having any ownership interest in, lending money or providing financial assistance to, providing services to, or being employed by any competitor. This restriction applies within five miles of the franchisee's territory or within five miles of any other Better Blend business operating on the date of expiration or termination.
If the franchise agreement is terminated before a 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. For Better Blend businesses without a defined territory, a 3-mile radius is used to define the territory for non-compete purposes.
If a restricted party fails to comply with these non-compete obligations during the restricted period, the period is extended by one day for each day of non-compliance. These covenants are independent of other agreements, and Better Blend can seek enforcement even if the franchisee has a claim against them. If any part of the non-compete agreement is deemed unenforceable, the parties intend for a court or arbitrator to modify the restriction to protect Better Blend's business interests.