Who are considered the 'Bound Parties' in relation to the non-competition and non-solicitation agreements for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to and not in limitation of any other restrictions on Franchisee contained herein, Franchisee and Franchisee's spouse, and, if Franchisee is not an individual, its shareholders, members, partners and managers, as applicable, and their spouses (each, a "Bound Party"), agree that they will not, during the term of this Agreement, directly or indirectly, for and on behalf of itself, himself, herself or any other person or entity, during the term of this Agreement, (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business (as defined below) or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business which is located (i) within the Protected Territory, or (ii) within a radius of twenty (20) miles as the crow flies of the Protected Territory, or (iv) within a radius of twenty
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the 'Bound Parties' who are subject to the non-competition and non-solicitation agreements include the franchisee, the franchisee's spouse, and if the franchisee is not an individual, its shareholders, members, partners, and managers, as applicable, and their spouses. These restrictions apply both during the term of the Franchise Agreement and for a period after the agreement's termination or the transfer of the franchise.
During the term of the agreement, these Bound Parties are prohibited from having any direct or indirect interest in a Competitive Business or performing services for a Competitive Business within the Protected Territory or a specified radius around it. After the agreement ends, the non-competition restrictions continue for two years, preventing the Bound Parties from engaging in a Competitive Business within certain geographic limits.
Additionally, the non-solicitation agreement prevents the franchisee and the Bound Parties from directly soliciting or interfering with the relationships between 360 Painting and its customers or vendors, as well as relationships between other 360 Painting franchisees and their customers or vendors, for a period of two years after the agreement's expiration or termination. This comprehensive approach ensures that individuals with knowledge of 360 Painting's business operations and confidential information are restricted from using that knowledge to compete against the franchisor or its franchisees.