What obligations of the franchisee entity do Principal Owners of Batteries Plus Bulbs agree to discharge?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
red for local store promotion under Section 11(B) above. The foregoing remedies are in addition to all other remedies and rights of Franchisor under applicable law.
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.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 47–48)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, Principal Owners are subject to certain covenants, particularly regarding non-competition, both during the term of the Franchise Agreement and for a period after the agreement expires or is terminated. A "Principal Owner" is defined as any entity or person with a direct or indirect ownership stake of ten percent (10%) or greater in the franchisee. If the franchisee is an individual, that individual is considered a Principal Owner.
During the term of the agreement, Principal Owners are prohibited from engaging in any business that competes with Batteries Plus Bulbs. This includes owning, operating, or having any interest in a business that distributes, sells, or services batteries, light bulbs, device repair, key fob repair or replacement, or any related products or services that are similar to those offered by Batteries Plus Bulbs. The restriction extends to involvement as an employee, agent, consultant, partner, officer, director, or shareholder of a competing entity. There are limited exceptions such as with prior written consent from Batteries Plus Bulbs, or holding less than one percent (1%) of publicly traded securities.
Post-termination, Principal Owners face a similar non-compete restriction for two years after the Franchise Agreement expires or is terminated, or from the date the franchisee ceases to conduct business under the agreement, whichever is later. This prevents them from directly or indirectly participating in a competitive business within a specified area. These restrictions are designed to protect Batteries Plus Bulbs' market position and proprietary business model.
These non-compete obligations are significant for potential Batteries Plus Bulbs franchisees, as they directly impact the Principal Owners' ability to engage in related business ventures, both during and after their involvement with the franchise. Prospective franchisees should carefully consider these limitations and how they align with their long-term business interests and plans.