Does the Beauty Bungalows franchise agreement specify whether the non-compete applies to passive investments in conflicting businesses?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as otherwise approved in writing by the Company, I shall not, while in my position with the Franchisee, for myself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, or limited liability company, own, maintain, engage in, be employed by, or have any interest in any other business which: develops, operates, constructs, manages, provides, rents or leases studios, suites, offices or rooms to individuals, businesses or groups that provide spa services, barbering, beauty services, cosmetology services, wellness services, personal care services, massage services, nail care services, skin
Source: Item 23 — RECEIPTS (FDD pages 48–177)
What This Means (2025 FDD)
The 2025 Beauty Bungalows Franchise Disclosure Document (FDD) includes a sample Confidentiality and Restrictive Covenant Agreement that trained employees, officers, directors, general partners, members, Operating Principal(s), Key Manager(s), and any other management personnel of the franchisee must adhere to. This agreement focuses on preventing involvement in competing businesses.
Specifically, while in a position with the Beauty Bungalows franchisee, individuals are prohibited from owning, maintaining, engaging in, being employed by, or having any interest in any other business that develops, operates, constructs, manages, provides, rents, or leases studios, suites, offices, or rooms to individuals, businesses, or groups that provide spa services, barbering, beauty services, cosmetology services, wellness services, personal care services, massage services, nail care services, or skin care services.
However, the FDD excerpt does not explicitly state whether this restriction extends to passive investments in such businesses. A prospective Beauty Bungalows franchisee should seek clarification from the franchisor regarding whether passive investments in competing businesses are also prohibited under the non-compete agreement.