Is Bft allowed to franchise or license others to operate a business offering the same or similar products/services as Bft, but under different marks, within a Bft franchisee's Designated Territory?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our parents/affiliates reserve the exclusive right to conduct the following activities under the Franchise Agreement and/or Multi-Unit Agreement (as appropriate): (i) establish and operate, and license any third party the right to establish and operate, other Studios and Studios using the Marks and System at any location outside of your Designated Territory(ies) and, if applicable, Development Area; (ii) market, offer and sell products and services that are similar to the products and services offered by the Studio under a different trademark or trademarks at any location, within or outside the Designated Territory(ies) and, if applicable, the Development Area; (iii) use the Marks and System, as well as other such marks we designate, to distribute any Approved Products and/or Approved Services in any alternative channel of distribution, within or outside the Designated Territory(ies) and Development Area (including the Internet and other e-commerce channels and streaming platforms; wholesale
stores, retail stores, catalog sales, etc.) as further described below; (iv) to acquire, merge with, or otherwise affiliate with, and after that own and operate, and franchise or license others to own and operate, any business of any kind, including, without limitation, any business that offers products or services the same as or similar to the Approved Products and Approved Services (but under different marks), within or outside your Designated Territory(ies) and, if applicable, Development Area; (v) use the Marks and System, and license others to use the Marks and System, to engage in any other activities not expressly prohibited in your Franchise Agreement and, if applicable, your Multi-Unit Agreement; and (vi) open and operate, or license third parties the right to open or operate, Studios at "Non-Traditional Sites" both within and outside the Designated Territory and, if applicable, Development Area. "Non-Traditional Site" means any location that is situated within or as part of a larger venue or facility and, as a result, is likely to draw the predominance of its customers from those persons who are using or attending events in the larger venue or facility (for example, "big box" gyms and/or fitness facilities, cruise ships, military bases, shopping malls, airports, sports facilities and stadiums, industrial or office complexes, hotels, train stations and other transportation facilities, travel plazas, casinos, hospitals, theme parks, convention centers, colleges/universities, multi-unit residential properties, and other similar captive market locations).
Source: Item 12 — TERRITORY (FDD pages 50–54)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, Bft reserves specific rights regarding operations within and outside a franchisee's designated territory. Bft has the right to acquire, merge, or affiliate with any business, including those offering similar products or services under different trademarks, within or outside a franchisee's designated territory. Bft can also franchise or license others to own and operate such businesses. This means that even within a franchisee's designated territory, Bft could potentially authorize a business offering similar services, as long as it operates under a different brand.
Bft also retains the right to market and sell similar products and services under different trademarks at any location, whether inside or outside the designated territory. Additionally, Bft can use its trademarks to distribute approved products and services through any alternative channel of distribution, including the internet, e-commerce, and wholesale, regardless of the franchisee's territory. These rights are reserved to Bft and its affiliates, allowing them to explore various business opportunities without being restricted by the boundaries of a franchisee's territory.
This extensive reservation of rights has significant implications for prospective Bft franchisees. While a franchisee is granted a designated territory, Bft retains considerable freedom to operate or license competing businesses, even within that territory, as long as they operate under different marks. This could potentially lead to increased competition for the franchisee. Therefore, it is crucial for potential franchisees to carefully consider the potential impact of these reserved rights on their business and profitability before investing in a Bft franchise.