During the term of the Bee Organized agreement, can a franchisee divert business from the franchisor?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS
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 explicitly prohibited from diverting business away from the franchisor, its affiliates, or other franchisees during the term of the agreement. This restriction is part of the in-term non-competition obligations outlined in the document. Engaging in such activities is considered unfair competition and would cause harm to Bee Organized, the system, and other franchisees.
Specifically, the agreement states that franchisees cannot divert or attempt to divert any business or clients from Bee Organized, its affiliates, or franchisees. Additionally, franchisees are prohibited from inducing any customer or client of Bee Organized, its affiliates, franchisees, or the franchisee themselves to any other person or business that is not a Bee Organized Business. These activities are classified as "Prohibited Activities" under the agreement.
This restriction also extends to the franchisee's owners and spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty, reinforcing their commitment to these non-competition obligations. This measure ensures that all parties closely associated with the franchisee are aligned in preventing any diversion of business or clients from the Bee Organized system.
For a prospective Bee Organized franchisee, this means a strict adherence to the non-compete terms is required throughout the duration of the franchise agreement. Any attempt to redirect business or clients to other ventures, even indirectly, could be considered a breach of contract, leading to potential legal and financial repercussions.