What are the 'Covenants' outlined in Section 14 of the Batteries Plus Bulbs Franchise Agreement?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
14. COVENANTS
- A. Non-Solicitation Of Customers. Franchisee covenants that, during the term of this Agreement, and for a period of two (2) years thereafter, Franchisee will not, directly or indirectly divert or attempt to divert any business, account or customer of the Store or any other Batteries Plus® stores or the System to any competing business.
- B. Covenant Not To Compete During Term. Franchisee (and each Principal Owner) will not, during the term of this Agreement, directly or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, having any interest in, or assist any person or entity engaged in any business (including any e-commerce or internet-based business) that distributes, sells or otherwise deals in, at wholesale or retail, any battery, light bulb or related products, any device repair, key fob repair or replacement, or other services offered at a Batteries Plus® store, or any other related business that is competitive with or similar to a Batteries Plus® store, except: (i) with Franchisor's prior written consent; or (ii) the ownership of securities listed on a stock exchange or traded on the over-the-counter market that represent one percent (1%) or less of that class of securities.
- C. Post-Term Covenant Not To Compete. Franchisee (and each Principal Owner) will not, for a period of two (2) years after this Agreement expires or is terminated or the date on which Franchisee ceases to conduct the business franchised under this Agreement, whichever is later, directly or as an
employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership or corporation, own, operate, lease, franchise, conduct, engage in, be connected with, having any interest in, or assist any person or entity engaged in any business that distributes, sells or otherwise deals in, at wholesale or retail, any battery, light bulb or related products, any device repair, key fob repair or replacement, or other services offered at a Batteries Plus® store, or any other related business that is competitive with or similar to a Batteries Plus® store that is located at the Store or within a fifteen (15) mile radius of the former site of the Store or any other then existing Batteries Plus® store; provided, however, that this Section 14(C) will not apply to: (i) other stores that Franchisee operates under a franchise agreement with us; or (ii) the ownership of securities listed on a stock exchange or traded on the over-thecounter market that represent one percent (1%) or less of that class of securities. For purposes of this Section, any form of e-commerce business or website that distributes, sells or otherwise deals in, at wholesale or retail, any battery, light bulb or related products or any device repair, key fob repair or replacement, or other services offered at a Batteries Plus® store, or any other related business that is competitive with or similar to a Batteries Plus® store will be in violation of this provision if such ecommerce business or website offers, sells or otherwise makes its products or services available to individuals residing within or businesses located within fifteen (15) mile radius of the former site of the Store or any other then-existing Batteries Plus® store. Franchisee agrees that the length of time in this Section 14(C) will be tolled for any period during which Franchisee is in breach of the covenants or any other period during which Franchisor seeks to enforce this Agreement.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, Section 14 outlines specific covenants related to non-solicitation and non-competition, which are legally binding restrictions on the franchisee's activities both during and after the franchise term.
During the term of the agreement, franchisees are prohibited from diverting or attempting to divert any business, account, or customer from their Batteries Plus Bulbs store or any other store within the Batteries Plus Bulbs system to any competing business. This prevents franchisees from using their access to the Batteries Plus Bulbs network to benefit a rival company. Franchisees (and each Principal Owner) also cannot engage in any competitive business that involves the distribution, sale, or service of batteries, light bulbs, device repair, key fob repair/replacement, or related products and services. The only exceptions are with the franchisor's prior written consent or holding a minor stake (1% or less) in publicly traded securities.
Post-termination, the non-compete covenant extends for two years after the franchise agreement expires or is terminated. During this period, franchisees (and each Principal Owner) are restricted from engaging in any competitive business within a 15-mile radius of their former Batteries Plus Bulbs store or any other existing Batteries Plus Bulbs store. This restriction also applies to e-commerce businesses targeting customers within that radius. The duration of this post-term covenant can be extended if the franchisee breaches the agreement or if Batteries Plus Bulbs seeks to enforce it.
These covenants are typical in franchise agreements to protect the brand's market share, customer relationships, and competitive advantage. Prospective Batteries Plus Bulbs franchisees should carefully consider these restrictions and how they might impact their future business opportunities before entering into the agreement.