For Big Apple Bagels, what activities are included in the definition of a 'Competitive Business' after termination or expiration of the agreement?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Covenant Not To Compete. Upon termination or expiration of this Agreement, Developer agrees that for a period of two (2) years, commencing on the effective date of expiration or termination of this Agreement, or the date on which all persons restricted by this Paragraph begin to comply with this Paragraph, whichever is later, Developer (and its shareholders, partners, or member) will not have any interest as an owner, partner, director, officer, employee, consultant, representative, agent, lender, lessor, or in any other capacity, in any Competitive Business operating within a ten (10) mile radius of the Exclusive Area or within ten (10) miles of any other franchisee of Franchisor, or of any company-owned or affiliate-owned BAGELS Store or My Favorite Muffin Store, except for BAGELS Stores and My Favorite Muffin Stores operated under Franchise Agreements granted by Franchisor and the ownership of securities listed on a stock exchange or traded on the over-the-counter market that represent three percent (3%) or less of that class of securities. For purposes of this Paragraph 11, "Competitive Business" shall mean the sale of sale of bagels, cream cheeses, muffins, sandwiches, and/or coffee, as well as any other items or products that Developer is authorized to sell subsequent to the date of this Agreement, to the public through retail or wholesale channels of distribution.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, a "Competitive Business" is defined within the context of the covenant not to compete that applies after the termination or expiration of the franchise agreement. This definition specifies the types of business activities that a former franchisee is restricted from engaging in.
Specifically, a "Competitive Business" includes the sale of bagels, cream cheeses, muffins, sandwiches, and/or coffee. This definition also extends to any other items or products that the Big Apple Bagels franchisee was authorized to sell during the term of the agreement. The restriction applies whether these sales are made through retail or wholesale channels of distribution, covering a broad range of potential competitive activities.
This non-compete clause is in effect for two years after the agreement's termination or expiration. During this period, the franchisee is restricted from having any interest in a Competitive Business within a ten-mile radius of their former Exclusive Area, or within ten miles of any other Big Apple Bagels or My Favorite Muffin store (whether franchisee-owned, company-owned, or affiliate-owned). The only exception to this restriction is for ownership of securities representing 3% or less of a publicly traded company. This clause aims to protect Big Apple Bagels' market share and brand integrity by preventing former franchisees from directly competing using similar products and services within a defined geographic area.