During the term of the Bee Organized agreement, can a franchisee fund a Competitive Business?
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 restricted from certain activities during the term of their agreement to prevent unfair competition. Specifically, franchisees are prohibited from operating, managing, or funding a Competitive Business.
This restriction means that as a Bee Organized franchisee, you cannot actively invest in or provide financial support to any business that directly competes with Bee Organized's services. However, there is an exception: a franchisee can own an interest of 3% or less in a publicly traded company that is considered a Competitive Business. This allowance is likely due to the limited influence a small shareholder would have on a large, publicly traded competitor.
The agreement also extends these restrictions to the franchisee's owners and spouses, requiring them to sign a Franchise Owner and Spouse Agreement and Guaranty. This ensures that all parties with a significant interest in the franchise are committed to avoiding competitive activities that could harm Bee Organized. These measures are in place to protect Bee Organized's market position and the interests of other franchisees within the system.