If a restriction in the Buildingstars franchise agreement is considered too broad, what action can a court of competent jurisdiction take?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
XVI. MISCELLANEOUS PROVISIONS
- A. Waiver. No waiver by BUILDINGSTARS of any default of the FRANCHISEE shall constitute a waiver of any other default and shall not preclude BUILDINGSTARS from thereafter requiring strict compliance with this Agreement.
- B. Severability. Should any provision of this Agreement be construed or declared invalid, such decision shall not affect the validity of any remaining portion which shall remain in full force and effect as if this Agreement had been executed with such invalid portion eliminated. If any restriction contained in this Agreement is deemed too broad to be capable of enforcement, a court of competent jurisdiction is hereby authorized to modify or limit such restriction to the extent necessary to permit its enforcement. All covenants contained in this Agreement, including but not limited to those relating to non-solicitation and non-competition shall be interpreted and applied consistent with the requirements of reasonableness and equity.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, if a court finds any restriction in the franchise agreement too broad to be enforced, the court is authorized to modify or limit the restriction. This modification would be to the extent necessary to allow the restriction to be enforced. This clause relates to all covenants within the agreement, including non-solicitation and non-competition clauses, which must be interpreted and applied reasonably and equitably.
This provision is beneficial for a prospective Buildingstars franchisee because it prevents overly broad restrictions from being fully enforced against them. It ensures that any limitations on their business activities are reasonable and necessary to protect Buildingstars's legitimate interests, rather than being unduly burdensome. The franchisee is protected from restrictions that could unfairly limit their ability to earn a livelihood.
Buildingstars also has the right to reduce the scope of any covenant contained in Sections IX and X, without the franchisee's consent, effective immediately upon written notice to the franchisee. The franchisee must comply with the covenant as modified. This provides Buildingstars with flexibility to adjust restrictions as needed, but also requires them to provide written notice to the franchisee, ensuring transparency.
This type of clause is fairly common in franchise agreements. It reflects a balance between protecting the franchisor's business interests and ensuring that the franchisee is not unfairly restricted. Prospective franchisees should carefully review all restrictions in the franchise agreement and understand how they may be modified or limited by a court or by Buildingstars itself.