If a Bojangles franchisee contests the termination of their agreement, who operates the restaurant during the legal proceedings, and for whose benefit?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event that this Agreement is terminated and Franchisee contests the validity of the termination, the party that operates the Restaurant during the period commencing with the date that notice of termination was given and ending with the date upon which a final notice and nonappealable judgment resolving the issue is entered, shall operate the Restaurant for the benefit of the prevailing party in such contest, and shall account for, and pay over, any profits earned during said period to the other party, if such other party is the party that prevails.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, if a franchisee contests the termination of their franchise agreement, the party that operates the restaurant during the legal proceedings will do so for the benefit of the party that ultimately prevails in the dispute. This period begins with the date the termination notice was given and ends when a final, non-appealable judgment is entered.
This means that during the legal battle, the restaurant's operations continue, but the profits generated are not immediately distributed. Instead, they are held in trust, essentially, until the court decides who wins the case. If the franchisee wins, they receive the profits earned during this period. If Bojangles wins, the profits go to them.
This arrangement ensures that the restaurant remains operational and maintains its presence in the market, regardless of the legal dispute. It also creates an incentive for both parties to resolve the dispute efficiently, as the ultimate beneficiary of the restaurant's profits is contingent on the outcome of the legal proceedings. This is a fairly standard practice in franchising, aiming to minimize disruption to the business and protect the brand's reputation.