During the term of the agreement, can a Bojangles franchisee divert business from their Bojangles restaurant to a competitor?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
pliance with any provision of law.
- H. Franchisee shall comply with any surviving covenants contained in Paragraph XVI. of this Agreement.
XVI. COVENANTS
- A. Franchisee acknowledges that, pursuant to this Agreement, Franchisee will receive valuable specialized training and confidential information, including, without limitation, information relating to the operational, sales, promotional, and marketing methods and techniques of Franchiser and the System. Accordingly, Franchisee covenants that:
- (1) During the term of this Agreement, except as otherwise approved in writing by Franchisor, Franchisee and its shareholders or members shall not, either directly or indirectly, for themselves, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation or limited liability company:
- (a) Divert or attempt to divert any business or customer of the Restaurant to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with Franchisor's Proprietary Marks, Trade Dress and the System; or
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- (b) Own, maintain, advise, help, invest in, make loans to, be employed by, be the landlord of, engage in, or have any interest in:
- (i) Any restaurant business which: (a) competes with any Bojangles restaurant or which sells fried chicken, biscuits and/or biscuit sandwiches, or other items which are featured menu items at Bojangles restaurants; and (b) is located within ten (10) miles from the Restaurant or any Bojangles restaurant that is open, planned for construction or under construction; or
- (ii) Any fast food restaurant business which is located (a) within ten (10) miles from the Restaurant or any Bojangles restaurant that is open, planned for construction, or under construction, or (b) within the designated market area within which the Restaurant is situated.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, franchisees are restricted from diverting business to competitors during the term of the agreement. Specifically, unless approved in writing by Bojangles, a franchisee and their shareholders or members cannot directly or indirectly divert or attempt to divert any business or customer of the Restaurant to any competitor. This includes any action that could be injurious or prejudicial to the goodwill associated with Bojangles' Proprietary Marks, Trade Dress, and the System. This restriction is in place to protect the Bojangles brand and its market position.
Furthermore, during the term of the agreement, franchisees are prohibited from owning, maintaining, advising, helping, investing in, making loans to, being employed by, being the landlord of, engaging in, or having any interest in competing restaurant businesses. This restriction applies to any restaurant that competes with Bojangles or sells similar items like fried chicken, biscuits, and/or biscuit sandwiches within a ten-mile radius of the franchisee's Bojangles restaurant or any other Bojangles restaurant that is open, planned for construction, or under construction. It also extends to any fast-food restaurant business within that ten-mile radius or within the designated market area of the franchisee's restaurant.
These covenants are designed to prevent franchisees from using the knowledge, training, and confidential information they gain from Bojangles to benefit a competing business. The restrictions apply not only to the franchisee but also to their shareholders and members, ensuring a comprehensive safeguard against conflicts of interest. These measures are typical in franchising to maintain brand consistency and prevent unfair competition within the franchise system.
However, there is an exception to these restrictions. Franchisees are allowed to own less than two percent beneficial interest in the outstanding equity securities of any corporation registered under the Securities Exchange Act of 1934. This exception allows franchisees to make minor investments in publicly traded companies that may operate competing restaurant businesses without violating the franchise agreement.