What specific actions related to Section 13.2 (non-compete) are prohibited for a Better Blend franchisee?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
13.2 Covenants Not to Compete.
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") 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.
- (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.
- 13.3 General Manager and Key Employees. If requested by BBF, Franchisee shall cause its general manager and other key employees reasonably designated by BBF to sign BBF's thencurrent form of confidentiality and non-compete agreement (unless prohibited by applicable law).
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Section 13.2 outlines covenants not to compete, which restrict certain activities of the franchisee, any owner, and any spouse of an owner (referred to as "Restricted Parties"). During the term of the Franchise Agreement, these Restricted Parties are prohibited from directly or indirectly having any ownership interest in, lending money or providing financial assistance to, providing any services to, or being employed by, any Competitor. A "Competitor" is defined as any food service business which offers smoothies or blended drinks.
After the agreement expires or is terminated for any reason, the restrictions continue for two years. During this post-term period, the Restricted Parties are prohibited from the same activities (ownership, lending, providing services, or employment) with any Competitor within five miles of the franchisee's territory or within five miles of any other Better Blend business operating on the date of expiration, termination, or transfer. If the agreement is terminated before the 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.
These covenants are independent of other provisions in the Franchise Agreement. If any part of the non-compete agreement is deemed unenforceable, the parties intend for the arbitrator or court to modify the restriction to protect Better Blend's business interests. The existence of any claim the franchisee may have against Better Blend does not serve as a defense against the enforcement of these covenants. Non-compliance with these obligations extends the restrictive period by one day for each day of noncompliance. Better Blend may also require the franchisee's general manager and other key employees to sign confidentiality and non-compete agreements.