In the Boulder Designs agreement, what is the maximum extent to which limitations on disclosure of Confidential Information or on competition will be provided if a covenant is deemed unenforceable?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company reserves the right to reduce the scope of the obligations under the covenants contained in Articles 7 and 17 of the Franchise Agreement unilaterally and without the consent of any other person or entities effective upon giving notice thereof.
If all or any portion(s) of any provision(s) of this Agreement are held to be invalid, unreasonable, illegal or unenforceable under applicable law, such invalid, unreasonable, illegal or unenforceable portion(s) of any provision(s) shall be amended, limited or excluded from this Agreement to the minimum extent required by applicable law so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Boulder Designs Franchise Disclosure Document, if any part of the agreement regarding covenants is deemed invalid or unenforceable, the company has the right to reduce the scope of the obligations to the minimum extent required by applicable law. This ensures that the rest of the agreement remains in effect. This adjustment can be made unilaterally by Boulder Designs without needing consent from the franchisee or any other parties, and it becomes effective upon notification.
This provision means that if a court finds a specific restriction too broad or unreasonable, Boulder Designs can modify the restriction to make it enforceable while still protecting its interests. This could involve reducing the geographic area or the time period of a non-compete clause. The goal is to maintain as much protection as possible without violating legal standards.
For a prospective Boulder Designs franchisee, this clause offers some reassurance that overly restrictive covenants can be adjusted. However, it also means that the franchisee must be prepared to comply with the remaining enforceable restrictions, which could still significantly limit their activities after the franchise agreement ends. It is important to understand what these restrictions are and how they might impact future opportunities.
This type of clause is fairly common in franchise agreements, as it allows the franchisor to adapt to varying state laws and judicial interpretations while still safeguarding their confidential information and competitive advantage. Franchisees should seek legal counsel to fully understand the implications of these clauses in their specific circumstances.