Is the non-compete clause in the Bath Tune Up agreement considered a reasonable limitation?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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 that is, or is intended to be, located within, or within a 25 mile radius of, the Territory or the territory of any BATH TUNE-UP® business in existence or under development as of the expiration date.
For purposes of this section, "expiration date" is the date that this Agreement expires without renewal or is terminated (regardless of the reason for termination), or that Franchisee transfers all of its interest in this Agreement.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the franchise agreement includes certain restrictions regarding competition. During the term of the agreement, Bath Tune Up will not establish or operate another Bath Improvements business using the Bath Tune Up system and marks within the franchisee's territory, with some exceptions.
Specifically, a Bath Tune Up franchisee cannot contract with Key Accounts, as the franchisor may enter into agreements with Key Accounts for services across multiple territories. If a franchisee wishes to service Key Accounts in their territory as a subcontractor, they must sign the franchisor's Master Services Agreement. However, the franchisee can choose whether or not to service a Key Account on a case-by-case basis. If the franchisee opts out of servicing a Key Account or fails to provide services to a Key Account on two occasions within a 12-month period, Bath Tune Up may grant others the right to service that Key Account in the territory.
Following the expiration or termination of the franchise agreement, a franchisee is restricted from owning, operating, or having a financial interest in any competitor within the territory or within a 25-mile radius of any existing or developing Bath Tune Up business. This restriction applies to involvement in any competitive business, including corporations, partnerships, trusts, or joint ventures. This non-compete clause is designed to protect Bath Tune Up's market and brand integrity by preventing former franchisees from directly competing in the same geographic area for a specified time after their franchise agreement ends.