Under what condition does Paragraph X.A. not apply to ownership by a Developer of equity securities in a corporation according to the Bojangles franchise agreement?

According to Bojangles's 2025 Franchise Disclosure Document, Paragraph X.A. of the Development Agreement does not apply if a Developer owns 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 Bojangles developers to hold small, passive investments in publicly traded companies, even if those companies might operate businesses that could be considered competitive.

This provision is fairly standard in franchising, as it allows franchisees and developers to diversify their investment portfolios without necessarily violating non-compete agreements. The key is the 'less than two percent' threshold, which is generally considered a non-controlling interest. This clause ensures that developers are not actively involved in managing or influencing competing businesses while still allowing them to participate in the stock market.

For a prospective Bojangles developer, this means they can invest in publicly traded restaurant companies, even those that might compete with Bojangles, as long as their ownership stake remains below the two percent level. This offers some flexibility in personal investing without conflicting with the developer's primary obligation to focus on growing their Bojangles franchise.