Does the prohibition on competing businesses after termination of the Bft franchise agreement apply if the franchisee assigns their interest in the agreement?
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.
- (3) Transfer of All Ownership Interests. If an owner of Franchisee ceases to be an owner of Franchisee for any reason, the former owner shall comply with the provision of this Section 13.1.B as though this Agreement were terminated as of the date on which the owner ceased to be an owner.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the prohibition on competing businesses does apply even if the franchisee assigns their interest in the agreement. Specifically, for two years after the expiration or termination of the agreement, or after the franchisee has assigned their interest, the franchisee and related parties are restricted from involvement with any competing business. This restriction includes owning, maintaining, or being employed by a competing business.
The restrictions apply both at the authorized location of the Bft studio and within a ten-mile radius of that location, or any other Bft studio owned by the franchisor, its affiliates, or any other franchisee. This geographic scope extends to locations where Bft has offered or sold franchises as of the termination or expiration date.
This clause ensures that franchisees who sell or transfer their Bft franchise cannot immediately start or join a competing business that would directly undermine the Bft system. It protects Bft's market position and the investment made by other franchisees in the system. The restrictions also apply to former owners of the franchise if they cease to be an owner, further safeguarding Bft's interests.