What activities are prohibited under the post-termination non-competition covenant for a Bhc franchisee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) For a period of two years after the date ("Termination Date") this Agreement is terminated, is canceled, or expires without renewal pursuant to section 5.2 of this Agreement, Franchisee agrees that neither Franchisee nor any Principal Equity Operator will (either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any person, persons, partnership, corporation or other entity) operate, manage, own, assist or hold an interest in (direct or indirect as an employee, officer, director, shareowner, partner or otherwise), or engage in, any competing business selling goods or offering services equivalent to BHC Products or the Franchised Business, within a radius
of 25 miles of Franchisee's Territory or any other authorized retail location selling BHC Products, without Franchisor's express prior written consent, which consent may be withheld in Franchisor's sole and absolute discretion. Following termination or expiration of this Agreement, Franchisee must always refrain from any use, direct or indirect, of any Proprietary Information or Trade Secrets.
(b) If any valid, applicable law or regulation of a competent governmental authority having jurisdiction over this Agreement or the parties hereto limits Franchisor's rights under section 11.2(a) above, then the section will be deemed amended (or deleted) to conform to the requirements of such laws and regulations, but in such event (unless deleted) the provisions of the Agreement thus affected will be amended only to the extent necessary to bring it within the requirements of the law or regulation.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, after the franchise agreement is terminated, canceled, or expires without renewal, the franchisee is restricted from certain activities for a period of two years. Specifically, the franchisee (or any Principal Equity Operator) cannot operate, manage, own, assist, or hold an interest in any competing business that sells goods or offers services equivalent to Bhc products or the franchised business. This restriction applies within a 25-mile radius of the franchisee's territory or any other authorized retail location selling Bhc products.
This non-compete clause prevents a former Bhc franchisee from leveraging the knowledge and experience gained during their franchise term to directly compete with Bhc. The restriction extends not only to direct ownership but also to indirect involvement as an employee, officer, director, shareholder, or partner in a competing business. This broad definition aims to prevent franchisees from circumventing the non-compete agreement through various means.
Bhc does retain the right to grant express prior written consent to waive this non-compete restriction, but can withhold such consent at its sole discretion. Additionally, the franchisee must refrain from using any proprietary information or trade secrets after the termination or expiration of the agreement. This is a standard practice in franchising to protect the brand's confidential business methods and intellectual property.
The FDD also states that if any applicable law or regulation limits Bhc's rights under the non-competition covenant, the section will be amended or deleted to conform to those legal requirements. However, the agreement will only be amended to the extent necessary to comply with the law or regulation, ensuring that the non-compete agreement remains as enforceable as possible. This clause acknowledges that non-compete agreements are subject to state laws, which vary in their enforceability.