For how long after the termination date is the Master Franchisee of Bhc subject to the non-competition covenants?
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, Master Franchisee agrees that neither Master 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 Master 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, Master 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 Master Franchisee is subject to certain non-competition covenants for a period of two years after the termination, cancellation, or expiration of the Master Franchise Agreement. During this two-year period, the Master Franchisee, along with any Principal Equity Operator, is restricted from operating, managing, owning, assisting, or holding 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 Master Franchisee's Territory or any other authorized retail location selling BHC Products. Bhc requires express prior written consent from the Franchisor to engage in such activities, and the Franchisor may withhold this consent at its discretion.
This post-termination non-competition covenant is designed to protect Bhc's interests by preventing former Master Franchisees from using the knowledge and experience gained during their franchise term to directly compete with the brand. The 25-mile radius restriction aims to minimize the potential impact on existing Bhc locations. The clause also states that following termination or expiration of the Agreement, the Master Franchisee must always refrain from any use, direct or indirect, of any Proprietary Information or Trade Secrets.
However, the FDD also provides a caveat: 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. This means that the enforceability of the non-competition agreement may vary depending on the jurisdiction and applicable laws. Prospective franchisees should be aware of the specific regulations in their area that may affect the enforceability of these covenants.
It is common in the franchise industry to have post-termination non-competition agreements to protect the brand and prevent unfair competition. The duration and scope of these agreements can vary, but a two-year restriction within a defined geographic area is fairly typical. Prospective Bhc franchisees should carefully review these covenants and understand their obligations if they decide to terminate or not renew their franchise agreement.