If a Bft franchisee assigns their interest in the franchise agreement, does the non-compete apply?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. After the Term of this Agreement. Franchisee agrees that, unless (and then only to the extent) prohibited by Applicable Law, Franchisee, the Restricted Parties, and its owners will comply with the following:
- (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.
- (2) Prohibition on Competing Businesses. 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 own, maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend credit to, lease/sublease space to, or have any interest in or involvement with, any other Competing Business: (i) at the Authorized Location; or (ii) within a ten (10)-mile radius of (a) the Authorized Location, or (b) any other BFT Studio owned by Franchisor, its affiliates, or any franchisee, which is open, under lease or otherwise under development as of the date this Agreement expires or is terminated.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the non-competition covenants apply even after a franchisee assigns their interest in the franchise agreement. Specifically, for two years after a Bft franchisee assigns their interest in the agreement, they, along with any Restricted Parties, must adhere to certain restrictions. These restrictions include prohibitions on franchising activities and engaging in competing businesses.
The prohibition on franchising activities prevents the franchisee from being involved 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 restriction applies in any location where Bft can demonstrate it has offered or sold franchises as of the date the agreement is terminated or expires.
The prohibition on competing businesses prevents the franchisee from owning, maintaining, engaging in, or being involved with any other Competing Business. This applies at the Authorized Location or within a ten-mile radius of the Authorized Location, or any other Bft Studio owned by Bft, its affiliates, or any franchisee, which is open, under lease, or otherwise under development as of the date the Agreement expires or is terminated. These non-compete terms are broad and it is important to understand the full scope of these restrictions before entering into a franchise agreement with Bft.