Who is responsible for paying the damages and costs incurred in enforcing the termination provisions of the Bft Franchise Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Enforcement of Covenants. Developer agrees that: (a) the restrictions contained and described in this Article 6 are reasonable and necessary to protect the legitimate interests of the System and Franchisor, (b) the existence of any claims it may have against Franchisor, whether or not arising out of this Agreement, shall not constitute a defense to the enforcement of the covenants in this Article 6, and (c) Developer's or any Restricted Party's violation of the terms of this Article 6 will cause irreparable injury to Franchisor for which no adequate remedy at law is available and that Franchisor shall be entitled, without bond (which requirement is hereby waived), to preliminary and permanent injunctive relief and damages, as well as an equitable accounting of all earnings, profits, and other benefits arising from such violation, which remedies shall be cumulative and in addition to any other rights or remedies to which Franchisor shall be entitled. Developer shall pay all costs and expenses, including, without limitation, reasonable attorneys' fees, incurred by Franchisor in connection with the enforcement of this Article 6. If Developer or a Restricted Party violates any post-term or post-transfer restriction described in this Article 6, the restrictions contained herein shall remain in effect until two (2) years after Developer or such Restricted Party begins to comply with those restrictions. If Developer contests the enforcement of this Article 6 and enforcement is delayed pending litigation, and if Franchisor prevails, the period of non-competition shall be extended for an additional period equal to the period of time that enforcement of this Article 6 is delayed. Courts are authorized and directed to reduce the scope or duration (or both) of the provision(s) in issue solely to the extent necessary to render it enforceable and/or reasonable and to enforce the provision so revised. Franchisor may, in its discretion and upon written notice, reduce the scope of any covenant not to compete, or any portion thereof, without Developer's consent.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, the developer, or franchisee, is responsible for paying all costs and expenses, including reasonable attorney's fees, if Bft incurs these costs while enforcing Article 6 of the agreement. Article 6 likely contains covenants related to protecting Bft's system and interests. This obligation extends to violations of post-term or post-transfer restrictions, where the franchisee remains responsible for compliance for two years after beginning to adhere to those restrictions.
If a franchisee contests the enforcement of Article 6, and the enforcement is delayed due to litigation, the franchisee may be responsible for an extended period of non-competition. If Bft prevails in the litigation, the non-competition period will be extended by the length of the delay caused by the legal challenge. This provision ensures that Bft is protected from damages caused by a franchisee's violation of the agreement, even if the franchisee attempts to delay enforcement through legal means.
This section of the FDD also states that courts are authorized to modify the scope or duration of any provision to make it enforceable and reasonable. Bft also retains the discretion to reduce the scope of any covenant not to compete without the franchisee's consent, providing flexibility in enforcing these provisions. This clause highlights the importance of understanding the restrictions and obligations outlined in Article 6 of the franchise agreement, as well as the potential financial consequences of non-compliance and legal challenges.