What is the geographic radius within which a former Bhc franchisee is prohibited from operating a competing business after termination?
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, a franchisee is subject to a post-termination non-competition covenant. This means that for two years after the termination, cancellation, or expiration of the Franchise Agreement, the franchisee (or any Principal Equity Operator) cannot operate or be involved 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. Bhc's prior written consent is required to engage in such activities within this radius, and Bhc can withhold this consent at its discretion.
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 shortly after their departure. The 25-mile radius is designed to protect existing Bhc locations from immediate competition by a former franchisee who might try to capitalize on the brand recognition and customer base they developed while operating under the Bhc name. The clause also restricts involvement as an employee, officer, director, shareholder, or partner in a competing business.
However, the FDD also states that if any applicable law or regulation limits Bhc's rights under this non-competition covenant, the section will be amended or deleted to comply with those legal requirements. This means that the enforceability of the 25-mile radius and the two-year period may vary depending on the specific jurisdiction and its laws regarding non-compete agreements. Franchisees should consult with legal counsel to understand the specific enforceability of this clause in their location.
It is important to note that this restriction applies to both the franchisee and any Principal Equity Operator, ensuring that those with significant financial interest in the franchise are also bound by the non-compete agreement. This provision aims to prevent individuals closely associated with the former franchise from circumventing the non-compete clause by operating a competing business through another entity. Franchisees should be aware of these restrictions and consider them carefully before entering into a franchise agreement with Bhc.