What is the geographic scope of the non-compete covenant for Buff City Soap after you cease being an Operator?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
During your employment with Employer you may have access to, or be provided with, documents or other materials that constitute Confidential Information, and you acknowledge that information included as Confidential Information may be in the form of hard copy documents, electronic documents or files or information stored in or on any other media. By signing this Agreement you agree that Franchisor is the sole and exclusive owner of all such Confidential Information regardless of its form and, upon termination or cessation of your employment with Employer for any reason, you will immediately return to Employer all of the Confidential Information you may have, and you will retain no copies (whether in hard copy, electronic or other form) of any Confidential Information.
3. COMPETITION.
(a) For so long as you are Employer's Operator under the Franchise Agreement and for a period of two years from the date you cease to be Employer's Operator, you will not, either directly or indirectly, individually or through, on behalf of, or in conjunction with any other person:
- (i) Own, maintain, operate, be employed by, engage in, franchise, lease property to, advise, help, make loans to, or have any interest in, either directly or indirectly, any Competitive Business;
- (ii) Divert or attempt to divert any actual or prospective business or customer of the Makery to any Competitive Business, by direct or indirect inducement or otherwise; or
- (iii) Perform, directly, any or indirectly, any other act injurious to or prejudicial to the goodwill associated with the Marks and the System
The above covenants apply exclusively in the United States of America during the time that you serve as Operator for the Makery and within three miles of any then-existing Buff City Soap Makery during the 2-year period following the date you cease to be Operator of the Makery.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, the geographic scope of the non-compete covenant after you cease being an Operator depends on the agreement you sign. One agreement states that the non-compete applies exclusively in the United States of America during the time that you serve as Operator for the Makery and within three miles of any then-existing Buff City Soap Makery during the 2-year period following the date you cease to be Operator of the Makery. Another agreement states that following the expiration of the Term, termination of this Agreement, or an approved Transfer of this Agreement and with respect to a Principal, following the date the Principal ceases to be a Principal under this Agreement, this restriction will apply to any Competitive Business located (1) within the Territory; (2) at or within three miles of any Buff City Soap Makery then operating or under construction within or outside the United States, except as otherwise approved in writing by Franchisor. A third agreement states that following the expiration of the Term, termination of this Agreement, or an approved Transfer of this Agreement and with respect to a Principal, following the date the Principal ceases to be a Principal under this Agreement, this restriction will apply to any Competitive Business located: (A) within the Designated Area; (B) at or within five miles of the Makery; or (C) within five miles of any Buff City Soap makery then operating or under construction in the United States or outside the United States, except as otherwise approved in writing by Franchisor.
These non-compete clauses prevent you from engaging in any competitive business that could harm Buff City Soap's market share or goodwill. The restrictions vary in geographic scope, ranging from the United States to a specific territory or designated area, and extending to a radius of three to five miles around any Buff City Soap Makery. The duration of these restrictions is generally two years from the date you cease to be an Operator or Principal.
It's important to note that these restrictions may be subject to legal review and modification. If any part of the non-compete is found to be unreasonable, a court may reduce the time or distance to what is deemed reasonable. Additionally, any period of non-compliance with the non-compete obligations will not count towards fulfilling the two-year restriction period. Prospective franchisees should carefully consider these non-compete terms and seek legal advice to understand their implications fully.
Buff City Soap also retains significant rights to operate and license other businesses, including competing businesses, outside of a franchisee's protected area. This means that even if a franchisee complies with the non-compete agreement, Buff City Soap could still establish competing businesses in nearby locations or through alternative channels of distribution. Franchisees should be aware of these reserved rights and their potential impact on their business.