For Bath Tune Up, can an Affiliate of the Franchisor own and operate a Company-Owned Operation?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
1.4. Company-Owned Operation
The term "Company-Owned Operation" or "COO" means a business or businesses similar to some or all aspects of the Franchised Business owned and operated by Franchisor or its Affiliate for its own account.
1.1. Affiliate
An "Affiliate" of Franchisor or Franchisee, as the case may be, means all people in the following categories when they are conducting business activities related to Franchisor or Franchisee: (a) all people who Control, are Controlled by, or are under common Control with, Franchisor or Franchisee, (b) all direct or indirect shareholders, partners, members, or owners of Franchisor or Franchisee, regardless whether they Control Franchisor or Franchisee, and (c) all officers, directors, employees, and agents of Franchisor or Franchisee and of Franchisor's or Franchisee's other Affiliates.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, a Company-Owned Operation, or COO, is defined as a business similar to the Franchised Business that is owned and operated by Bath Tune Up or its affiliate for its own account. An affiliate of Bath Tune Up is defined as any person or entity that controls, is controlled by, or is under common control with Bath Tune Up. This includes direct or indirect shareholders, partners, members, or owners, as well as officers, directors, employees, and agents of Bath Tune Up or its other affiliates.
This definition indicates that Bath Tune Up or its affiliates can indeed own and operate businesses similar to the franchised business. This is a common practice in franchising, where franchisors may operate company-owned stores alongside franchised locations. These company-owned operations can serve various purposes, such as testing new products or services, providing training locations, or maintaining a presence in markets where franchising may not be immediately viable.
For a prospective Bath Tune Up franchisee, this means that they may encounter company-owned locations operating in the same market or even in close proximity to their franchised territory. While the franchise agreement likely contains provisions regarding territorial protection, it's important for franchisees to understand that Bath Tune Up retains the right to operate its own locations. Franchisees should inquire about the franchisor's strategy for company-owned operations and how they are managed to avoid direct competition with franchisees. Understanding the relationship between franchised and company-owned locations is crucial for assessing the potential impact on a franchisee's business.