Is the non-compete covenant in the Bombs Away agreement independent of other provisions?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor operating in any of Franchisee's Territory or
the territory of any other Bombs Away business operating on the date of termination or transfer, as applicable.
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court or arbitrator, then the parties intend that the court or arbitrator modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Bombs Away Franchising. Franchisee agrees that the existence of any claim it may have against Bombs Away Franchising shall not constitute a defense to the enforcement by Bombs Away Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
- 13.3 General Manager and Key Employees. If requested by Bombs Away Franchising, Franchisee will cause its general manager and other key employees to sign Bombs Away Franchising's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).
ARTICLE 14. DEFAULT AND TERMINATION
14.1 Termination by Franchisee. Franchisee may terminate this Agreement only if Bombs Away Franchising violates a material provision of this Agreement and fails to cure or to make substantial progress toward curing the violation within 30 days after receiving written notice from Franchisee detailing the alleged default. Termination by Franchisee is effective 10 days after Bombs Away Franchising receives written notice of termination.
14.2 Termination by Bombs Away Franchising.
- (a) Subject to 10-Day Cure Period.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the non-compete covenants within both the Franchise Agreement and the Guaranty Agreement are designed to be independent of other provisions. This means that the enforceability of the non-compete clauses is not contingent upon the validity or enforceability of any other part of the agreement. This is further reinforced by stating that any claims the franchisee or guarantor may have against Bombs Away do not serve as a defense against the enforcement of the non-compete.
For a prospective Bombs Away franchisee, this independence clause has significant implications. Even if other aspects of the Franchise Agreement are disputed or found to be unenforceable, Bombs Away retains the right to enforce the non-compete provisions. This could restrict the franchisee's ability to engage in competitive activities, even if Bombs Away has allegedly breached the agreement in some way. The franchisee must comply with the non-compete terms, or the restrictive period will be extended by one day for each day of noncompliance.
Additionally, both the franchisee and the guarantor agree that if a court or arbitrator finds any portion of the non-compete to be unenforceable or unreasonable, the intention is for the court or arbitrator to modify the restriction only to the extent necessary to protect Bombs Away's legitimate business interests. This suggests that Bombs Away is seeking to ensure that the non-compete is upheld as much as possible, even if it requires some adjustment by a legal authority. Franchisees should be aware of this and understand the potential limitations it places on their future business activities.
Bombs Away also requires that if requested, the franchisee will cause its general manager and other key employees to sign Bombs Away Franchising's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).