Besides being a franchisee of All Team, what other activities are considered a 'Similar Business' that a franchisee is restricted from participating in?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE, therefore, warrants that during the term of this Agreement, unless FRANCHISEE has the prior written consent of ATFC, FRANCHISEE shall not directly or indirectly, through itself or through corporations, partnerships, trusts, associations, joint ventures, unincorporated businesses, limited liability companies, or otherwise perform any services for, engage in or acquire, be an employee of, have any financial, beneficial or equity interest in, loan money to, lease property to, or have any interest based on profits or revenues of any business which is similar or competing with the business franchised hereunder ("Similar Business"), except as a duly licensed franchisee of ATFC. This section does not limit FRANCHISEE's obligation under Section XI.B. of this Agreement.
At the time that this Agreement is signed, a "Similar Business" is one which provides temporary and permanent staffing in the following areas: healthcare and environmental, hospitality and food service, management recruiting, labor and light industrial and administrative and clerical. However, as noted in Section XV, the business of the Agency is subject to change, and a "Similar Business" shall be interpreted at the time that the applicable provision is effective.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to the 2025 All Team Franchise Disclosure Document, a "Similar Business" is defined as one that provides temporary and permanent staffing in specific areas. These areas include healthcare and environmental, hospitality and food service, management recruiting, labor and light industrial, and administrative and clerical. This definition applies at the time the franchise agreement is signed. However, the FDD notes that the business of the All Team agency is subject to change, so the interpretation of what constitutes a "Similar Business" will be determined at the time the relevant provision regarding non-competition is in effect.
This non-compete clause means that during the term of the franchise agreement, an All Team franchisee cannot directly or indirectly engage in any of the listed staffing services, unless they obtain prior written consent from All Team. This restriction extends to various forms of business involvement, including performing services for, being employed by, having a financial interest in, loaning money to, or leasing property to any business that competes with All Team's franchised business. The franchisee is essentially prevented from participating in any competing staffing business, except as another All Team franchisee.
This restriction is designed to protect All Team's knowledge, know-how, and expertise that it makes available to its franchisees. The FDD emphasizes that franchisees acknowledge that All Team is providing this expertise for the purpose of operating the agency strictly and solely within the designated area. The non-compete agreement aims to prevent franchisees from using the franchisor's proprietary information and systems to benefit a competing business, which would be considered an unfair method of competition. Prospective franchisees should carefully consider the breadth of this restriction and ensure they are not currently involved in any activities that could be deemed a "Similar Business" before signing the franchise agreement.