Does the Beehive Homes non-compete agreement prevent a franchisee from being a shareholder in a similar business?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
RESTRICTIVE COVENANTS
- 12.1. Noncompetition. During the Term of this Agreement and for a period of three (3) years after the Transfer, termination or expiration of this Agreement, or if later, the Franchisee's cessation of operations at the Location, the Franchisee shall not, and if Franchisee is a corporation or other legal entity, its officers, directors, shareholders, partners, managers, members and Equity Owner(s) shall not, in any capacity, directly or indirectly, except with the written consent of Franchisor, engage in any business which is the same or substantially similar to the type of business covered by this Agreement in any location for which any of the Names and Marks is registered. The Franchisee will not employ or seek to employ any person who is at the same time employed by any business operated by Franchisor or any of its Affiliates, franchisees or other licensees and will not, directly or indirectly, induce any such person to leave his or her employment unless the Franchisee has obtained the prior written approval of Franchisor.
- 12.2. Nondisclosure.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the non-compete agreement does address shareholders. During the term of the agreement, a franchisee, including its officers, directors, shareholders, partners, managers, members, and equity owners, cannot engage in a similar business without written consent from Beehive Homes in any location where the brand's names and marks are registered. This restriction applies directly and indirectly, meaning that even a financial interest as a shareholder in a competing business is prohibited.
After the agreement terminates, expires, or the franchisee ceases operations, the non-compete restriction continues for three years. This extended period ensures that former franchisees and their associated parties do not immediately leverage their knowledge and resources to compete with Beehive Homes. The restriction is applicable to anyone who holds an equity stake in the franchise.
Furthermore, Beehive Homes requires its resident manager and all employees to execute a standard Non-Competition and Non-Disclosure Agreement. Signed copies of these agreements must be forwarded to Beehive Homes within one week of execution or upon the date of employment, whichever is sooner. This requirement extends the non-compete obligations beyond just the franchisee and its equity owners to include those directly involved in the daily operations of the Beehive Homes location.