In the Big Apple Bagels Confidentiality and Non-Competition Agreement, what is the agreement's effective date based on?
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 the 2025 Big Apple Bagels FDD, the non-compete agreement's effective date is determined by the termination or expiration date of the Development Agreement. Specifically, the two-year non-compete period begins either on the date of termination or expiration of the agreement or on the date when all individuals bound by the non-compete clause begin to comply with its terms, whichever occurs later. This means that the restrictions on the developer's involvement in any competitive business start from the point the agreement ends or when compliance with the non-compete terms begins.
This clause is significant for a Big Apple Bagels developer because it clarifies when the restrictions on their activities post-agreement take effect. The 'whichever is later' provision provides a degree of flexibility, potentially delaying the start of the non-compete period if there's a lag between the agreement's termination and the actual commencement of compliance.
It is important to note that the non-compete agreement restricts the developer (and its shareholders, partners, or members) from having any interest in a Competitive Business within a ten-mile radius of the Exclusive Area or within ten miles of any other franchisee of Big Apple Bagels, or of any company-owned or affiliate-owned Big Apple Bagels Store or My Favorite Muffin Store. A Competitive Business is defined as the sale of bagels, cream cheeses, muffins, sandwiches, and/or coffee, as well as any other items or products that the Developer is authorized to sell. The only exception is for BAGELS Stores and My Favorite Muffin Stores operated under Franchise Agreements granted by Big Apple Bagels 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.