Do the parties believe the restrictive covenants in the Coffee News agreement are reasonable?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Notwithstanding that the parties agree that any court of competent jurisdiction may modify the time period or specify geographical area of applicability in this agreement, the parties do not intend that a court be able to modify the payment terms set forth herein.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, both parties involved in the franchise agreement acknowledge and agree that the restrictive covenants within the agreement are considered reasonable. This agreement extends to the subject matter, duration, and geographical application of these covenants. This indicates that Coffee News and its franchisees have mutually determined that the limitations placed on the franchisee's activities, in terms of time and location, are fair and justifiable for protecting the brand and its market.
However, the agreement also includes provisions for enforceability, stating that if any portion of the restrictive covenants is deemed unreasonable, arbitrary, or against public policy, it will be considered divisible in terms of time and region. This means that if a court finds a specific restriction too broad or unfair, it can modify the covenant to a more reasonable scope rather than invalidating the entire agreement. The parties agree that a court can adjust the time period or geographical area of any covenant deemed unreasonable.
It is important to note that while the parties agree to judicial modification of time or geographical scope, they specifically exclude the payment terms from such modification. This means that the financial obligations outlined in the agreement are intended to remain unchanged, even if other parts of the agreement are adjusted by a court. This demonstrates a clear intention to maintain financial stability and predictability within the franchise relationship, regardless of potential disputes over restrictive covenants.