During employment with an Annex Brands franchisee, is an employee allowed to divert business to a competitor?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) During your engagement or employment, you will not, directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or entity, divert or attempt to divert any business or customer of ours to any competitor or other person by direct or indirect inducement or otherwise, but this Section will not prevent you from referring customers in good faith to other businesses, including but not limited to competitors' businesses, that may be able to provide those customers with products or services not available from our business.
Source: Item 23 — Receipts (FDD pages 110–299)
What This Means (2025 FDD)
According to the 2025 FDD, Annex Brands' confidentiality and non-competition agreement specifies that during employment or engagement with an Annex Brands franchisee, an employee cannot directly or indirectly divert or attempt to divert any business or customer to a competitor. This restriction is in place to protect the franchisee's business interests and customer relationships. However, the agreement does allow employees to refer customers in good faith to other businesses, including competitors, if the franchisee's business cannot provide the specific products or services needed by the customer. This exception ensures that customers' needs are met, even if it means directing them to a competitor.
This non-diversion clause is a standard practice in franchising to maintain the integrity of the franchise network and prevent unfair competition from within. It ensures that employees of an Annex Brands franchisee are focused on promoting and developing the franchised business rather than diverting opportunities to competitors. The agreement acknowledges that employees will have access to valuable trade secrets, confidential information, and training related to the Annex Brands system, further justifying the need for the non-diversion clause.
It is important for prospective franchisees to understand the scope and limitations of this clause, as it directly affects the behavior and responsibilities of their employees. Franchisees should ensure that their employees are aware of this restriction and the potential consequences of violating it. While the agreement aims to protect the franchisee's business, the exception for good faith referrals provides a balance that allows employees to assist customers without breaching their obligations.