Is a Beem Light Sauna franchisee allowed to divert business from their studio to a Competitive Business?
Beem_Light_Sauna Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.1 During Term. You acknowledge that you will receive valuable, specialized training and confidential information regarding the manufacturing, operational, sales, promotional, and marketing methods of us and the Brand. During the Term, you and your Owners must not, without our prior written consent, either directly or indirectly, for themselves, or through, on behalf of, or in conjunction with any other person or Entity:
- (a) own, manage, engage in, be employed by, advise, make loans to, lease or sublease space to, or have any other interest in any competitive business, as such term is defined in Schedule A (a "Competitive Business") at any location in the United States;
- (b) divert or attempt to divert any business or customer or potential business or customer of the Studio to any Competitive Business, by direct or indirect inducement or otherwise;
- (c) perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or
- (d) use any vendor relationship established through your association with us for any purpose other than to purchase products or equipment for use or retail sale in the Studio.
Source: Item 23 — RECEIPT (FDD pages 71–230)
What This Means (2025 FDD)
According to the 2025 Beem Light Sauna FDD, franchisees are explicitly prohibited from diverting business from their Beem Light Sauna studio to any Competitive Business during the term of their agreement. This restriction includes any attempt to redirect customers, potential customers, or business opportunities to a Competitive Business, whether through direct or indirect methods. A "Competitive Business" is defined broadly as any sauna studio, salon with a sauna offering, therapeutic light or laser treatment center, weight loss center, business selling nutritional supplements, business involved in self-care, or any business offering similar products, services, or sessions to a Beem Light Sauna studio, or any entity that franchises or licenses such businesses.
This non-compete provision extends beyond simply diverting business. Beem Light Sauna franchisees are also prohibited from owning, managing, or being employed by a Competitive Business, or engaging in any activity that could harm the goodwill associated with the Beem Light Sauna brand and system. Additionally, franchisees cannot use vendor relationships established through their association with Beem Light Sauna for purposes other than purchasing products or equipment for their studio.
After the franchise agreement ends, the restrictions on diverting business to a Competitive Business continue for two years. However, these post-term restrictions are geographically limited to a 10-mile radius of the former Beem Light Sauna studio or any other Beem Light Sauna studio operating or under development at the time of termination. This means that a former franchisee could potentially engage in a Competitive Business outside of this 10-mile radius after the two-year period.
Beem Light Sauna emphasizes the importance of these restrictions, stating that a breach of this agreement would entitle them to injunctive relief and a suit for damages. This highlights the franchisor's commitment to protecting its brand, system, and customer base, and underscores the potential legal and financial consequences for franchisees who violate these non-compete covenants.