What is considered a 'Prohibited Activity' for a Bee Organized franchisee during the term of the agreement?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or clients from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Bee Organized Business; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and would cause harm to Franchisor, the System and other Bee Organized Business franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, a franchisee is restricted from certain activities during the term of the Franchise Agreement, which are referred to as "Prohibited Activities." These include owning or having a legal or equitable interest in a Competitive Business (with a minor exception of owning 3% or less in a publicly traded company), operating, managing, funding, or performing services for a Competitive Business, diverting or attempting to divert business or clients from Bee Organized or its affiliates/franchisees, and inducing any customer or client to another business that is not a Bee Organized Business. Additionally, any actions or inactions violating Articles 6.B. and/or 6.C. of the agreement are also considered prohibited. These restrictions also apply to the franchisee's Owners and Spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty.
Bee Organized defines a 'Competitive Business' as any business offering services or products similar to those offered under the Bee Organized System, operating under a brand name similar to Bee Organized, or targeting the same customers as Bee Organized. This definition is broad and aims to prevent franchisees from directly competing with the Bee Organized system during the term of their agreement. The agreement emphasizes that engaging in Prohibited Activities would be unfair and cause harm to Bee Organized, the System, and other franchisees.
Furthermore, the FDD states that if a franchisee discloses confidential Know-How to an immediate family member, and that family member uses it to engage in activities that would be considered Prohibited Activities for the franchisee, it will be assumed that the franchisee has violated the agreement. However, the franchisee can challenge this assumption by providing conclusive evidence that they did not disclose the Know-How or permit its disclosure to the family member. Bee Organized also states that franchisees waive any right to challenge the terms of the agreement as being overly broad, unreasonable, or otherwise unenforceable.
Bee Organized also states that failure to comply with these Intellectual Property, Brand Protection and Non-Competition Covenants and Restrictions will cause irreparable harm to Bee Organized and/or other Bee Organized Business franchisees for which there is no adequate remedy at law. Therefore, any violation of these covenants will entitle Bee Organized to injunctive relief.