What happens if a provision of the Chocolate Bash franchise agreement is deemed unenforceable?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court, then the parties intend that the court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of CB Franchising. Franchisee agrees that the existence of any claim it may have against CB Franchising shall not constitute a defense to the enforcement by CB Franchising of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the franchise agreement includes a clause addressing the potential unenforceability of its covenants. Specifically, this relates to the non-compete agreements outlined in Section 13.2 of the agreement. These covenants apply not only to the franchisee but also to any owner or their spouse, preventing them from having an ownership interest in or being employed by a competitor during the term of the agreement and for a period of two years after the agreement expires or is terminated. This restriction applies within a five-mile radius of the franchisee's territory or any other Chocolate Bash business.
Chocolate Bash specifies that each covenant within the agreement is independent of the others. Therefore, if a court deems any part of the non-compete covenants unenforceable or unreasonable, the intention is for the court to modify the restriction only to the extent necessary to protect Chocolate Bash's legitimate business interests. The franchisee also agrees that any claims they may have against Chocolate Bash will not serve as a defense against the enforcement of these covenants by Chocolate Bash.
This clause provides a degree of flexibility, allowing a court to adjust specific terms rather than invalidate the entire non-compete agreement. For a prospective Chocolate Bash franchisee, this means that even if certain aspects of the non-compete clause are challenged and found unreasonable, the core intention to protect the Chocolate Bash brand and market presence remains, and the court will likely seek to find a modified restriction that achieves this balance. This could impact the franchisee's future business activities should they leave the Chocolate Bash system, but it also protects the overall integrity of the Chocolate Bash franchise network.