What are the geographic limits of the non-competition covenant for Beauty Bungalows franchisees during the term of the franchise?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
| H | “Cause” defined - non- curable defaults | Section 13.02(b) | Non-curable defaults include misrepresentation by you, failure to complete initial training, bankruptcy, insolvency, or appointment of receiver, abandonment, trademark misuses, unauthorized disclosure, unapproved transfers, or repeated noncompliance. (Termination upon bankruptcy may not be enforceable under U.S. Bankruptcy Law.) |
|---|---|---|---|
| I | Franchisee’s obligations on termination/nonrenewal | Sections 3.07, 13.03, 13.04 | Obligations include complete de- identification, non-competition, return of confidential or critical business information, payment of amounts due, and, upon Franchisor’s election, cooperation regarding assignment of lease. |
| J | Assignment of contract by franchisor | Section 14 | No restriction on our right to assign. |
| K | “Transfer” by franchisee - defined | Sections 1.23, 14.03 | Includes transfer of contract or assets or ownership change. |
| L | Franchisor approval of transfer by franchisee | Sections 14.04-14.08 | We have the right to approve all transfers but will not unreasonably withhold approval. |
| M | Conditions for franchisor approval of transfer | Section 14.04 | Franchise must be open for business to the general public at the Premises, New Franchisee qualifies, Transfer Fee paid, purchase agreement approved, training arranged, general release signed by you, and current agreement signed by new Franchisee. Any brokers’ fees or commissions that arise because of the transfer must be paid by the Franchisee. |
| N | Franchisor’s right of first refusal to acquire franchisee’s Business. | Section 14.09 | We can match any offer for your Business. |
| O | Franchisor’s option to purchase franchisee’s Business | Section 14.09 | We may purchase the Business pursuant to our Right of First Refusal to match any offer for your Business. |
| P | Death or disability of franchisee | Section 14.08 | Franchise must be assigned by estate to approved transferee within 120 days. |
| Q | Non-competition covenants during the term of franchise | Section 15.01 | No involvement in competing business anywhere in U.S. (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 36–40)
What This Means (2025 FDD)
According to Beauty Bungalows's 2025 Franchise Disclosure Document, franchisees are subject to a non-competition covenant during the term of the franchise agreement. This covenant restricts franchisees from involvement in any competing business anywhere within the United States. However, this restriction is subject to state law, meaning that the enforceability and specific terms may vary depending on the state in which the franchise operates.
This broad geographic restriction during the franchise term means that a Beauty Bungalows franchisee cannot own, operate, or be involved in any other business that competes with Beauty Bungalows anywhere in the U.S. This could significantly limit a franchisee's ability to diversify their business interests or engage in related ventures. Prospective franchisees should carefully consider this restriction and how it might impact their long-term business plans.
It is important for potential Beauty Bungalows franchisees to consult with legal counsel to understand how state law may affect the enforceability and scope of the non-competition covenant in their specific location. Franchisees should also inquire about any specific interpretations or limitations the franchisor may apply to this clause in practice. Understanding these details is crucial for making an informed decision about investing in a Beauty Bungalows franchise.