Is a Bananas Smoothies Frozen Yogurt franchisee allowed to divert business to a competitor?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) Divert, or attempt to divert any business, or customer of the Restaurant, to any competitor by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the good will associated with the Franchisor's proprietary marks and the System; or
(ii) Own, maintain, advise, help, invest in or make loans to, be employed by, engage in or have any interest in any business (including any business operated by Franchisee prior to entry into the Agreement) that operates a restaurant which, in whole or in part, sells the same or similar types of food and beverages as Franchisor or any of its franchisees including without limitation that which is sold by Franchisee at the Restaurant and specifically including salads, wraps, paninis, frozen yogurt and smoothies, including, but not limited to, any of the specific items set forth in Exhibit "One H".
Franchisee's
Existing Locations, set forth on the Summary Page and made a part hereof is (are) hereby excluded from this paragraph.
Source: Item 23 — RECEIPT (FDD pages 58–231)
What This Means (2025 FDD)
According to the 2025 Bananas Smoothies Frozen Yogurt Franchise Disclosure Document, franchisees are explicitly prohibited from diverting business to competitors. The agreement states that franchisees cannot attempt to divert any business or customers of the restaurant to any competitor, whether through direct or indirect means. This restriction is in place to protect the goodwill associated with the Bananas Smoothies Frozen Yogurt's proprietary marks and the overall system.
Furthermore, franchisees are restricted from owning, maintaining, advising, helping, investing in, making loans to, being employed by, engaging in, or having any interest in any business that operates a restaurant selling the same or similar types of food and beverages as Bananas Smoothies Frozen Yogurt. This includes, but is not limited to, salads, wraps, paninis, frozen yogurt, and smoothies. The FDD specifies that this restriction applies to any business operated by the franchisee prior to entering the agreement as well.
Existing locations of the franchisee, if any, that are listed on the Summary Page of the franchise agreement are excluded from this restriction. This exclusion suggests that if a franchisee already owns a competing business, it may be allowed to continue operating, provided it was disclosed and listed in the agreement. However, without such a pre-existing arrangement, the franchisee is bound by the non-compete terms to avoid any actions that could harm the Bananas Smoothies Frozen Yogurt brand and its market position.