Does the Bath Tune Up agreement allow for any exceptions to the non-compete clause?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Limited Exclusivity**
- (a) Except as provided in paragraphs (b), (c), (d) and (e) of this section, during the Term, Franchisor will not establish or operate within the Territory, or franchise any third party to establish or operate within the Territory, any other Bath Improvements business using the System and the Marks.
- (b) Franchisee may not contract with Key Accounts. Franchisee agrees that, from time to time, Franchisor may enter into agreements with Key Accounts that contemplate performance in multiple territories, including the Territory, of sales and/or installations of Bath Improvements. If Franchisee wishes to service Key Accounts in the Territory as Franchisor's subcontractor, it shall sign Franchisor's then-
current Master Services Agreement which shall govern all work performed by Franchisee for Key Accounts. Franchisee may choose whether to service any particular Key Account on a case by case basis. If Franchisee chooses to opt out with respect to any Key Account in the Territory, or if Franchisee fails to provide sales, installations, or other services to a particular Key Account in the Territory on any two occasions in a 12-month period, Franchisor may provide or grant others the right to provide sales, installations, or other services with respect to that particular Key Account in the Territory for the remainder of the term.
A customer in the Territory with a job that is too large for Franchisee to undertake or that Franchisee chooses not to service shall be deemed to be a Key Account for purposes of this Section 2.2(b) even if that Key Account is limited to the Territory.
- (c) Franchisee acknowledges that, from time to time, opportunities may arise to participate in joint marketing efforts with other BATH TUNE-UP® franchisees. If Franchisee is afforded the opportunity to participate in joint marketing efforts but declines to do so, the participating BATH TUNE-UP® franchisee must offer any leads for the Territory generated as a result of the joint marketing effort to Franchisee on reasonable terms and conditions (including maximum lead fees per referral) specified from time to time in the Manuals. If the participating franchisee complies with Franchisor's guidelines on the offering terms for the leads and Franchisee declines to accept the lead on the terms offered, then the participating franchisee will not be required to turn over the lead to Franchisee and the participating franchisee may instead work the lead in the Territory without compensation to Franchisee.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up Franchise Disclosure Document, the franchise agreement includes several exceptions to the non-compete clause. These exceptions primarily revolve around the franchisor's rights to operate, service key accounts, and manage customer leads under specific circumstances.
The Bath Tune Up agreement states that the franchisor retains the right to solicit, sell to, and service Key Accounts, including those within the franchisee's territory, provided they comply with specific sections of the agreement. A "Key Account" is defined as a customer in the franchisee’s territory with a job too large for the franchisee to handle or one that the franchisee chooses not to service. Additionally, if a franchisee declines to participate in joint marketing efforts with other Bath Tune Up franchisees, they must be offered any leads generated for their territory on reasonable terms. If the franchisee declines the lead on those terms, the participating franchisee can work the lead in the territory without compensating the original franchisee.
Furthermore, Bath Tune Up reserves the right to provide or grant other franchisees the right to service customer leads within a franchisee's territory if the original franchisee defaults on the agreement and the franchisor withholds customer leads as a result. The franchisor also retains broad rights to operate and franchise Bath Improvement businesses outside the franchisee's territory, acquire or be acquired by other companies, and sell services and products through other means that do not involve both the System and the Marks. These reserved rights and exceptions to exclusivity could impact a franchisee's business within their territory.