Is a Bevaris Alliance franchisee allowed to entice away employees from other franchisees after termination?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 20.1 In order to protect the Confidential Information, trade secrets and business connections of the Franchisor and the Franchisor's other franchisees, the Franchisee and the Individual covenant with the Franchisor that they shall not:
- (a) during the Term or for 24 months after termination or expiration of this agreement, solicit or endeavor to entice away from the Franchisor or any other franchisee of the Franchisor the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business; or
- (b) during the Term or for 24 months after termination or expiration of this agreement, in the course of any business concern which is in competition with or similar to the Branded Business or any business of the Franchisor or any Restricted Business, offer to employ or engage, or otherwise endeavor to entice away, any employee of the Franchisor or any other franchisee of the Franchisor who could materially damage the interests of the Franchisor or any other franchisee of the Franchisor, and with whom the Franchisee or the Individual dealt in the 24 months prior to termination of this agreement; or
- (c) during the Term, or for 24 months after termination or expiration of this agreement, be involved as agent, consultant, director, employee, owner, partner or shareholder with any business concern which is (or intends to be) in competition with any Restricted Business; or
- (d) during the Term, or for 24 months after termination of this agreement, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or
- (e) at any time after termination of this agreement, represent himself as connected, in any way, with the Franchisor.
- 20.2 None of the restrictions in clause 20.1 shall prevent the Franchisee or Individual from:
- (a) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange; or
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, there are restrictions in place to protect the franchisor and its franchisees from solicitation of employees. Specifically, during the term of the franchise agreement and for 24 months after termination or expiration, a franchisee is prohibited from offering employment to or attempting to entice away any employee of the franchisor or any other Bevaris Alliance franchisee. This restriction applies to employees with whom the franchisee dealt in the 24 months prior to termination, and only if that employee could materially damage the interests of the franchisor or another franchisee.
This clause aims to prevent franchisees from poaching valuable employees who possess critical knowledge or skills that could harm the Bevaris Alliance business. The restriction is limited to employees the franchisee had direct dealings with in the two years leading up to termination, suggesting a focus on preventing the exploitation of established working relationships. The materiality clause further refines the restriction, indicating it is not intended to prevent the hiring of low-level employees whose departure would not significantly impact the business.
For a prospective Bevaris Alliance franchisee, this means that after the franchise agreement ends, they cannot actively recruit or hire employees from the franchisor or other franchisees for a period of two years, especially those with whom they had a working relationship and whose loss would be detrimental. This restriction is in place to protect the stability and competitive advantage of the Bevaris Alliance network. However, the franchisee is not restricted from holding an investment of no more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognized stock exchange.
It is important for potential franchisees to fully understand the scope and limitations of this non-solicitation clause. While it protects the Bevaris Alliance system, it also places restrictions on the franchisee's ability to hire experienced personnel within the same industry after the franchise agreement concludes. Franchisees should seek legal counsel to fully understand the implications of this clause and how it may affect their future business endeavors.