Is a Bevaris Alliance franchisee allowed to be involved with a competing business during the term of the agreement?
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:
- (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
- 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, franchisees face restrictions on their involvement with competing businesses during the term of the franchise agreement. Specifically, clause 20.1(c) states that during the term of the agreement, and for 24 months after termination or expiration, franchisees cannot be involved as an agent, consultant, director, employee, owner, partner, or shareholder with any business concern which is (or intends to be) in competition with any Restricted Business.
This restriction aims to protect Bevaris Alliance's confidential information, trade secrets, and business connections, as well as those of its other franchisees. The term 'Restricted Business' is not defined in the provided excerpts, so it is important to understand what activities Bevaris Alliance considers to be a restricted business.
However, there is an exception to this restriction. Clause 20.2(a) states that franchisees or individuals are allowed to hold an investment of not more than 5% of the total issued share capital of any company, regardless of whether it is listed on a recognized stock exchange. This allows for minor investments in publicly traded companies, even if they compete with Bevaris Alliance, without violating the franchise agreement.
In summary, a Bevaris Alliance franchisee is generally prohibited from being actively involved in a competing business during the term of the agreement and for 24 months after, with a limited exception for minor passive investments. Prospective franchisees should carefully review the definition of 'Restricted Business' in the full FDD and franchise agreement to fully understand the scope of these restrictions.