What are the non-competition covenants 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). |
| R | Non-competition covenant after the franchise is terminated or expires | Section 15.01 | No competing business for 2 years within 20 miles from the boundary of your Protected Territory or from another Beauty Bungalows franchise, company-owned Franchise, or on the Internet (including after assignment) (subject to state law). |
| S | Modification of | Sections 7.04, 8.10, | No modifications generally but Manual and |
| agreement | 18.02 | the System are subject to change. |
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 non-competition covenants during the term of the franchise agreement. Specifically, Item 17, Section 15.01 states that franchisees cannot be involved in any competing business anywhere in the U.S., although this is subject to state law. This means that while operating a Beauty Bungalows franchise, a franchisee is restricted from participating in any other business that could be considered competitive, regardless of location within the United States.
This restriction is a standard practice in franchising, designed to protect the franchisor's brand and market share. However, the breadth of the restriction—covering the entire U.S.—is notable. Prospective franchisees should be aware that this non-compete clause could significantly limit their ability to engage in other business ventures during the term of their franchise agreement. The clause's enforceability may vary depending on state laws, which franchisees should investigate.
For multi-unit developers, the non-competition covenants in the Franchise Agreement also apply to the Development Agreement, as stated in Section 8 of Item 17. This means that the restrictions on competitive business involvement extend to the developer's activities as well, ensuring that the developer is fully committed to growing the Beauty Bungalows brand within their designated area without divided interests. Franchisees should consult with a legal professional to fully understand the implications of these non-competition covenants in their specific state and business context.