Does the indemnification provided by the Developer to Buff City Soap extend beyond the expiration or termination of the franchise agreement?
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)
Based on the 2025 Buff City Soap Franchise Disclosure Document, the non-compete obligations of the Developer (franchisee) and its Principals extend beyond the term of the franchise agreement. Specifically, the Developer and each Principal agree that during the Term, and for a continuous uninterrupted period of two years following its expiration, termination, or an approved Transfer, they will not engage in any Competitive Business without Buff City Soap's prior written consent.
This restriction includes not diverting business from the Makeries, performing any act injurious to the goodwill associated with the Marks and the System, or having any interest in a 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, 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.
This means that even after the franchise agreement ends, a franchisee is restricted from operating or being involved with a competing business for two years. The geographical scope of this restriction changes after the agreement ends, becoming more localized to the territory and areas around existing Buff City Soap locations. The FDD also states that any period of non-compliance with these obligations will not be credited toward satisfying the two-year restriction period, effectively extending the restriction if a franchisee violates it.
This extended non-compete period is a significant consideration for potential Buff City Soap franchisees. It limits their ability to immediately switch to a competing business after their franchise agreement concludes, potentially impacting their future career or business options. Franchisees should carefully evaluate these restrictions and their implications before entering into a franchise agreement with Buff City Soap.