What is the geographic scope of the non-compete restriction for a Buff City Soap franchise after the agreement's termination?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Non-Compete. Developer and each of its Principals covenant and agree that during the Term, and for a continuous uninterrupted period of two years following its expiration, termination, or an approved Transfer and with respect to a Principal, following the date the Principal ceases to be a Principal under this Agreement, Developer and each of its Principals, as applicable, will not, without Franchisor's prior written consent, either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any Person, firm, partnership, corporation, or other Entity:
- (1) Divert or attempt to divert any actual or prospective business or customer of any of the Makeries to any Competitive Business, by direct or indirect inducement or otherwise.
- (2) Do or perform directly or indirectly any other act injurious to or prejudicial to the goodwill associated with the Marks and the System;
- (3) 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. During the Term, these restrictions apply to any Competitive Business located within the United States (excluding Developer's Existing Brands). 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.
If any part of these restrictions is found to be unreasonable in time or distance, each month of time or mile of distance may be deemed a separate unit so that the time or distance may be reduced by appropriate order of the court to that deemed reasonable. If, at any time during the two year period following the expiration, termination, or approved Transfer of this Agreement or the date any Principal ceases to be a Principal under this Agreement, Developer or its Principals fail to comply with its obligations under this Section 8(a), that period of non-compliance will not be credited toward satisfaction of the two-year period.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to the 2025 FDD, after the Buff City Soap franchise agreement expires, is terminated, or is transferred, the non-compete restriction applies 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, unless the Franchisor approves otherwise in writing. This also applies to a Principal after the date the Principal ceases to be a Principal under this Agreement.
This means that after leaving the Buff City Soap system, a former franchisee is restricted from engaging in a competitive business within their former territory and within a three-mile radius of any existing or under-construction Buff City Soap location. This restriction applies globally, not just within the United States. The franchisor retains the right to waive this restriction in writing.
The FDD also states that if any part of these restrictions is found to be unreasonable in time or distance, each month of time or mile of distance may be deemed a separate unit so that the time or distance may be reduced by appropriate order of the court to that deemed reasonable. If, at any time during the two year period following the expiration, termination, or approved Transfer of this Agreement or the date any Principal ceases to be a Principal under this Agreement, Developer or its Principals fail to comply with its obligations under this Section 8(a), that period of non-compliance will not be credited toward satisfaction of the two-year period.
This non-compete agreement is for a continuous uninterrupted period of two years. The restrictions are designed to protect Buff City Soap's market share and brand recognition by preventing former franchisees from using their knowledge of the business to directly compete with existing locations. Prospective franchisees should carefully consider these limitations and how they might affect their future business opportunities after leaving the Buff City Soap system.