During the term of the Bojangles agreement, can a franchisee divert business from the Bojangles restaurant to a competitor?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Franchisor 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
Source: Item 23 — RECEIPTS (FDD pages 82–573)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, franchisees are prohibited from diverting or attempting to divert business from their Bojangles restaurant to any competitor during the term of the agreement. This restriction extends to the franchisee, their shareholders, or members, and applies whether the diversion is direct or indirect. The aim is to protect the goodwill associated with Bojangles's proprietary marks, trade dress, and overall system. However, this covenant does not apply if the franchisee owns less than two percent beneficial interest in the outstanding equity securities of any corporation registered under the Securities Exchange Act of 1934.
This provision ensures that franchisees remain committed to the success of their Bojangles restaurant and do not use their knowledge or resources gained from the franchise to benefit a competing business. It prevents franchisees from leveraging the Bojangles system and brand recognition to draw customers away to another establishment, which could harm the Bojangles brand and the performance of other franchisees.
This type of covenant is standard in franchising to protect the brand and prevent conflicts of interest. Franchisees are expected to focus their efforts on growing their Bojangles business and upholding the standards of the franchise system. The agreement specifies that any action that harms the goodwill of Bojangles is prohibited, reinforcing the importance of maintaining the brand's reputation and customer loyalty. Franchisees should be aware of these restrictions and ensure their business activities align with the terms of the franchise agreement to avoid potential breaches.