Can a Bath Tune Up franchisee make loans to a competitor during the term of the agreement?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
ct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System. For purposes of this Agreement, a "Competitor" is a business that derives revenues from the direct or indirect retail sale of Bath Improvements or services or other products or services similar to those sold by the Franchisor or any of its franchisees.
- (ii) Own, maintain, operate, engage in, or have any financial or beneficial interest in (including any interest in corporations, partnerships, trusts, unincorporated associations, or joint ventures), advise, assist, or make loans to, any Competitor located within the United States, its territories or commonwealths, or any other country, province, state, or geographic area in which Franchisor has used, sought registration of, or registered the Marks or similar marks, or operates or licenses others to operate a business under the Marks or similar marks.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up Franchise Disclosure Document, a franchisee is restricted from making loans to competitors during the term of the agreement. Specifically, a Bath Tune Up franchisee cannot "own, maintain, operate, engage in, or have any financial or beneficial interest in (including any interest in corporations, partnerships, trusts, unincorporated associations, or joint ventures), advise, assist, or make loans to, any Competitor located within the United States, its territories or commonwealths, or any other country, province, state, or geographic area in which Franchisor has used, sought registration of, or registered the Marks or similar marks, or operates or licenses others to operate a business under the Marks or similar marks."
This restriction is in place to protect Bath Tune Up's market position and prevent franchisees from supporting businesses that directly compete with the Bath Tune Up system. The definition of "Competitor" includes any business that derives revenue from the direct or indirect retail sale of bath improvements or services similar to those offered by Bath Tune Up or its franchisees. This broad definition ensures that franchisees cannot provide financial support to any entity that could potentially take away business from the Bath Tune Up brand.
This clause applies during the entire term of the franchise agreement, meaning that franchisees must avoid any such financial involvement with competitors from the moment they sign the agreement until it expires or is terminated. This restriction is not limited to the franchisee's specific territory but extends to any area where Bath Tune Up has registered its trademarks or operates a business, further emphasizing the brand's commitment to preventing competitive conflicts of interest.
Beyond the term of the agreement, there are additional restrictions. For a period of two years after the agreement's expiration date, the franchisee is prohibited from diverting or attempting to divert any business or customer of the franchised business to any competitor. This post-term restriction reinforces the importance of protecting Bath Tune Up's goodwill and customer base even after the franchise relationship ends.