In the Buff City Soap Guaranty, what specific sections of the Franchise Agreement are Principals obligated to individually perform under?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
unds to customers. For any such sales, the amount actually paid by the customer after the discount or refund is applied and not the advertised price will be considered for purposes of Net Sales.
12. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
- (a) Business Entity Franchisee.
- (1) Franchisee warrants that it is duly organized or formed and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation; it has the necessary consents, approvals, licenses and/or permits to carry out the business activities contemplated by this Agreement; it will furnish such other information about its organization or formation as Franchisor may reasonably request to confirm the same; and the execution and delivery of this Agreement has been duly authorized by it. Franchisee's company agreements must provide that its purpose and activities are restricted to the operation of Buff City Soap makeries and further must impose the restrictions against Transfer set forth in Section 18 of this Agreement.
- (2) If Franchisee is not publicly traded (i.e., less than 20% of its equity shares that are entitled to participate in the election of its Board of Directors are traded on a national exchange in the United States), it will disclose to Franchisor all Principals holding in excess of 5% of all Equity Interests in Franchisee and will disclose to Franchisor all beneficial owners, directors, officers, employees or agents of Franchisee who are government officials. Franchisee will provide Franchisor with such financial information as Franchisor may periodically request from Franchisee and each Principal.
- (3) If Franchisee is not publicly traded, each Principal will execute and deliver to Franchisor a Guaranty and Undertaking of Obligations in the form attached hereto as Exhibit B.
- (b) Ideas and Concepts. From time to time in connection with the operation of the Makery, Franchisee may create or develop Ideas and Concepts that Franchisee believes will improve the Products, System or the Makeries. Franchisee will promptly disclose such Ideas and Concepts to Franchisor and will not implement such Ideas and Concepts without the prior written approval of Franchisor. Franchisor may elect to use or adopt such Ideas and Concepts if Franchisor determines that such adoption or use will benefit the System. If Franchisor uses or adopts any of such Ideas and Concepts, they will be deemed to be part of the System without any compensation payable to Franchisee by Franchisor.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
Based on the 2025 Buff City Soap Franchise Disclosure Document, if a franchisee is not publicly traded, each principal must execute and deliver a Guaranty and Undertaking of Obligations. The franchisee's company agreements must restrict the company's purpose and activities to operating Buff City Soap makeries and must also include the transfer restrictions outlined in Section 18 of the Franchise Agreement.
Principals are also bound by non-compete and confidentiality obligations. During the term of the agreement and for two years after, principals cannot engage in any competitive business. This restriction applies to any competitive business located within the United States during the term. After the agreement ends, this restriction applies to competitive businesses within the designated area, within five miles of the Makery, or within five miles of any Buff City Soap makery operating or under construction in or outside the United States, unless the franchisor provides written approval otherwise.
Furthermore, principals must not disclose confidential information provided by Buff City Soap. They must protect this information with measures at least as strict as those used for their own confidential information. This obligation ensures that sensitive business information remains protected, contributing to the overall integrity and competitive advantage of the Buff City Soap franchise system.