What is the geographic scope of the prohibition on franchising activities after the termination of a Bft franchise agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Prohibition on Franchising Activities. For two (2) years after the expiration or termination (by Franchisor or by Franchisee for any reason) of this Agreement or after Franchisee has assigned its interest in this Agreement, neither Franchisee nor any other Restricted Party will, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation, be involved with any business that competes in whole or in part with Franchisor by offering or granting licenses or franchises, or establishing joint ventures, for the ownership or operation of a Competing Business. The geographic scope of the covenant contained in this Section is any location where Franchisor can demonstrate it has offered or sold franchises as of the date this Agreement is terminated or expires.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, for two years after the termination or expiration of the franchise agreement, the franchisee and related parties are prohibited from involvement with any business that competes with Bft by offering or granting licenses or franchises, or establishing joint ventures, for the ownership or operation of a Competing Business. This prohibition extends to any location where Bft can demonstrate it has offered or sold franchises as of the date the agreement terminates or expires.
This means that if a franchisee's agreement is terminated, they cannot engage in franchising activities that compete with Bft in any area where Bft has offered or sold franchises. This restriction is in place for two years to protect Bft's franchise system from competition by former franchisees who might leverage their knowledge of Bft's operations to create a competing franchise.
This restriction applies regardless of whether the termination was initiated by Bft or the franchisee. The geographic scope is not limited to the franchisee's specific territory but extends to any location where Bft has a franchise presence. A prospective franchisee should carefully consider this restriction, as it could significantly limit their business opportunities for two years after leaving the Bft system.