What is the process for obtaining written approval from the Beauty Bungalows Company to engage in a conflicting business?
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 care services, teeth-whitening services, skin tanning services, hair loss treatments services and hair treatment services and other similar personal services. (collectively, a "Competing Business").
I also agree that I will not undertake any action to divert business from the Franchised Business to any Competing Business or solicit any of the former customers or employees of Franchisee for any competitive business purpose.
Source: Item 23 — RECEIPTS (FDD pages 48–177)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, if a franchisee employee or manager wishes to engage in a business that competes with Beauty Bungalows, they must obtain written approval from the company. Specifically, paragraph 7 of the Sample Confidentiality and Restrictive Covenant Agreement states that unless Beauty Bungalows agrees otherwise in writing, the individual cannot own, maintain, engage in, be employed by, or have any interest in a Competing Business while in their position with the franchisee. This restriction applies to businesses that offer similar services such as spa services, beauty services, cosmetology services, and more.
This requirement ensures that individuals associated with a Beauty Bungalows franchise do not use their position to benefit a competing business, protecting Beauty Bungalows' market position and confidential information. The agreement also states that the individual cannot take action to divert business from the Franchised Business to any Competing Business or solicit any of the former customers or employees of Franchisee for any competitive business purpose.
It is important to note that Beauty Bungalows retains the right to reduce the scope of any covenant within the agreement without the individual's consent, effective immediately upon written notice. This provides Beauty Bungalows with flexibility in enforcing the agreement and addressing potential conflicts of interest. The company is also a third-party beneficiary of the agreement and may enforce it jointly or solely with the franchisee, further emphasizing the importance of adhering to these restrictions.
For a prospective franchisee, this means that any employee, officer, director, general partner, member, Operating Principal(s), Key Manager(s), and any other management personnel of Franchisee must adhere to this agreement. If they wish to be involved in a competing business, they must seek and obtain explicit written approval from Beauty Bungalows. This is a critical aspect to consider when staffing and managing a Beauty Bungalows franchise to avoid potential legal and business conflicts.