What restrictions and covenants are the Restricted Parties subject to under each Bft Franchise Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Noncompetition Restrictions. Developer acknowledges that, under each Franchise Agreement executed pursuant to this Agreement, the Restricted Parties (as defined in the Franchise Agreements) are subject to certain restrictions and covenants regarding activities which are deemed competitive with those of Franchisor, including restrictions regarding Competing Businesses, as that term is defined in the Franchise Agreement (the "Noncompetition Restrictions"). Developer acknowledges and agrees that it and its owners are subject to, and will comply with, all of the Noncompetition Restrictions described in the Franchise Agreements, each of which is adopted herein as though copied in its entirety. Developer further agrees that, in addition to any obligations with respect to Noncompetition Restrictions under the Franchise Agreements, for two (2) years after the expiration or sooner termination of this Agreement, or if applicable, after Developer or an owner of Developer has assigned its interest in this Agreement or in Developer (as applicable), the Restricted Parties or the transferring owner (as applicable) shall not own, maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend credit to, lease/sublease space to, provide services to, or have any interest in or involvement with, any other Competing Business: (a) within the Development Area; (b) within 10 miles outside the boundaries of the Development Area, or (c) within a 10-mile radius of any Studio that is open, under lease or otherwise under development as of the date this Agreement expires or is terminated or, if applicable, as to a transferring owner, the date of such transfer.
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 Bft's 2025 Franchise Disclosure Document, the Restricted Parties, as defined in the Franchise Agreements, are subject to certain restrictions and covenants regarding activities which are deemed competitive with those of Bft. These restrictions include those regarding Competing Businesses, as defined in the Franchise Agreement, and are referred to as the "Noncompetition Restrictions."
The developer acknowledges and agrees to comply with all Noncompetition Restrictions described in the Franchise Agreements. In addition to these obligations, for two years after the expiration or termination of the agreement, or after a developer or owner assigns their interest, the Restricted Parties or transferring owner cannot engage in any Competing Business. This includes owning, maintaining, being employed by, lending money to, leasing space to, providing services to, or having any involvement with any other Competing Business within the Development Area, within 10 miles outside the boundaries of the Development Area, or within a 10-mile radius of any open or developing Studio.
Bft also states that these restrictions are reasonable and necessary to protect the legitimate interests of the System and Bft. The existence of any claims against Bft does not constitute a defense against the enforcement of these covenants. Violation of these terms will cause irreparable injury to Bft, entitling them to injunctive relief, damages, and an equitable accounting of all earnings and profits arising from the violation. Bft is entitled to recover all costs and expenses, including reasonable attorneys' fees, incurred in enforcing these restrictions. If a party violates any post-term or post-transfer restriction, the restrictions remain in effect until two years after the party begins to comply. Courts are authorized to reduce the scope or duration of the restrictions to make them enforceable.