What is considered a 'Restricted Party' in the context of Bft's non-competition restrictions?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Noncompetition Restrictions. Developer acknowledges that, under each Franchise Agreement executed pursuant to this Agreement, the Restricted Parties (as defined in the Franchise Agreements) are subject to certain restrictions and covenants regarding activities which are deemed competitive with those of Franchisor, including restrictions regarding Competing Businesses, as that term is defined in the Franchise Agreement (the "Noncompetition Restrictions"). Developer acknowledges and agrees that it and its owners are subject to, and will comply with, all of the Noncompetition Restrictions described in the Franchise Agreements, each of which is adopted herein as though copied in its entirety. Developer further agrees that, in addition to any obligations with respect to Noncompetition Restrictions under the Franchise Agreements, for two (2) years after the expiration or sooner termination of this Agreement, or if applicable, after Developer or an owner of Developer has assigned its interest in this Agreement or in Developer (as applicable), the Restricted Parties or the transferring owner (as applicable) shall not own, maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend credit to, lease/sublease space to, provide services to, or have any interest in or involvement with, any other Competing Business: (a) within the Development Area; (b) within 10 miles outside the boundaries of the Development Area, or (c) within a 10-mile radius of any Studio that is open, under lease or otherwise under development as of the date this Agreement expires or is terminated or, if applicable, as to a transferring owner, the date of such transfer.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the definition of 'Restricted Parties' is determined within the Franchise Agreement itself. The document states that under each Franchise Agreement, the Restricted Parties are subject to certain restrictions and covenants regarding activities which are deemed competitive with those of Bft, including restrictions regarding Competing Businesses, as that term is defined in the Franchise Agreement.
For a developer, the non-competition restrictions extend for two years after the expiration or termination of the agreement, or after a developer or owner assigns their interest. During this period, the Restricted Parties or transferring owner cannot be involved with any other Competing Business. This includes owning, maintaining, engaging in, being employed by, lending money to, extending credit to, leasing space to, providing services to, or having any interest in or involvement with a Competing Business.
The restrictions apply (a) within the Development Area; (b) within 10 miles outside the boundaries of the Development Area, or (c) within a 10-mile radius of any Studio that is open, under lease or otherwise under development as of the date the Agreement expires or is terminated or, if applicable, as to a transferring owner, the date of such transfer. Therefore, prospective franchisees should carefully review the Franchise Agreement to understand who is specifically included in the definition of 'Restricted Parties' and the full scope of these non-competition obligations.