During the term of the Batteries Plus Bulbs agreement, can a franchisee be a shareholder in a competing business?
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 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to Batteries Plus Bulbs's 2025 Franchise Disclosure Document, franchisees are restricted from holding significant interests in competing businesses during the term of their agreement. Specifically, a franchisee (or any Principal Owner) cannot directly or indirectly own, operate, or be connected with any business that sells batteries, light bulbs, related products, or offers similar services to those of Batteries Plus Bulbs. This restriction extends to being an employee, agent, consultant, partner, officer, director, or shareholder of such a competing business.
However, there is an exception: franchisees can own securities listed on a stock exchange or traded over-the-counter, provided that the ownership represents one percent (1%) or less of that class of securities. This allows for minor investments in publicly traded companies that may have some overlap with Batteries Plus Bulbs's business, without violating the non-compete covenant. Franchisees can also engage in a competing business if they obtain prior written consent from Batteries Plus Bulbs.
For Multiple Unit Franchisees, these restrictions are also in place during the term of the agreement. They are prohibited from owning, operating, or being connected with any Competing Business, with the same exception for Stores operated under Franchise Agreements granted by Batteries Plus Bulbs and the ownership of securities representing one percent (1%) or less of that class of securities. This is to ensure that franchisees remain fully committed to the Batteries Plus Bulbs system and do not divert resources or business to competing ventures.
These covenants are designed to protect Batteries Plus Bulbs's market position and prevent franchisees from using the franchisor's confidential information and resources to benefit a competing business. Franchisees should be aware of these restrictions and ensure they comply with them to avoid breaching the Franchise Agreement.