During the term of the Bee Organized agreement, can a franchisee divert business from other franchisees?
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, franchisees are prohibited from diverting business from the franchisor, its affiliates, or other franchisees during the term of the agreement. The agreement explicitly states that franchisees cannot divert or attempt to divert any business or clients from Bee Organized or its related entities.
This restriction is part of the in-term non-competition obligations outlined in the agreement. Engaging in such activities is considered unfair competition and would cause harm to Bee Organized, the overall system, and other franchisees. This obligation extends not only to the franchisee but also to their owners and spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty.
This clause protects the integrity of the Bee Organized network by preventing franchisees from undermining each other's businesses. It ensures that franchisees focus on growing their own operations within their designated territory without encroaching on the customer base of others in the system. This promotes a collaborative environment and safeguards the brand's reputation.
However, franchisees are allowed to provide approved services and products to clients located within their operating territory. The marketing of the franchised business must be targeted to the franchisee's operating territory and comply with the restrictions set forth in the agreement. Franchisees must not engage in direct solicitation of clients or potential clients outside of their operating territory or within the operating territory of another Bee Organized Business.