Does the Bft non-disparagement clause prevent a franchisee from reporting possible violations of law to a government agency?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, nothing in this Agreement or any other agreement with Franchisor restricts or prohibits any person from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Securities and Exchange Commission, or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation. No person needs the prior authorization of Franchisor to engage in conduct protected by the preceding sentence, and no person needs to notify Franchisor that such person has engaged in such conduct.
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 non-disparagement clause does not prevent a franchisee from reporting possible violations of law or regulation to a government agency. The agreement explicitly states that despite the non-disparagement clause, franchisees and other related parties retain the right to communicate directly with, respond to inquiries from, provide testimony before, provide confidential information to, report possible violations of law or regulation to, or file a claim or assist with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Securities and Exchange Commission.
This provision also protects individuals making disclosures under whistleblower provisions of state or federal law or regulation. It clarifies that no prior authorization from Bft is needed to engage in such conduct, nor is there a requirement to notify Bft about engaging in such conduct.
This is a beneficial clause for potential Bft franchisees as it protects their right to report any legal violations without fear of retaliation or legal repercussions from the franchisor. This type of clause is becoming more common in franchise agreements to ensure compliance and ethical behavior within the franchise system.