Does the Guaranty of Performance for a Coffee News franchise have any geographic limitations on its enforcement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- The parties to this Agreement understand and agree Enforceability. 16.7 that, if any portion of the restrictive covenants set forth in this Agreement is held to be unreasonable, arbitrary, or against public policy, then that portion of those covenants shall be considered divisible as to time and region.
The parties to this Agreement agree that if any court or competent jurisdiction determines that the specified time period or the specified region of application of any covenant is unreasonable, arbitrary, or against public policy, then a lesser time period, geographical area or both, that is determined to be reasonable, non-arbitrary, and not against public policy, may be enforced against the parties hereto.
The parties to this Agreement agree and acknowledge that they are familiar with the present and proposed operations of "Coffee News" Franchises and believe that the restrictive covenants in this Agreement are reasonable with respect to their subject matter, duration, and geographical application.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, the enforceability of restrictive covenants within the franchise agreement can be modified regarding geographic area. Specifically, if a court finds the specified region of application of any covenant to be unreasonable, arbitrary, or against public policy, then a lesser geographical area may be enforced.
This means that while the initial agreement might define a specific geographic area where certain restrictions apply (such as non-compete clauses), a court could reduce this area if it deems the original scope too broad or unfair. This ensures that the restrictions are reasonable and don't unduly limit the franchisee's ability to operate or earn a livelihood.
For a prospective Coffee News franchisee, this clause offers a degree of protection against overly broad restrictions. It allows for a legal challenge to the geographic scope of non-compete or other restrictive covenants, potentially reducing the area in which these restrictions apply. However, it's important to note that the franchisee would bear the burden of proving that the original geographic scope is unreasonable, arbitrary, or against public policy. The document also states that the parties to the agreement believe the restrictive covenants are reasonable with respect to their subject matter, duration, and geographical application.