During the term of the Bhc franchise agreement, what specific activities are franchisees prohibited from engaging in regarding competing businesses?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
11. NON-COMPETITION COVENANTS
11.1 Exclusive In-Term Dealing.
- (a) Franchisee acknowledges it will receive valuable specialized training and access to Proprietary Information, including information regarding the operational, sales, promotional and marketing methods and techniques of the System and Franchisor's Trade Secrets. In consideration for the use and license of such valuable information, Franchisee agrees that it will not during the term of this Agreement operate, manage, own, assist or hold an interest in (direct or indirect as an employee, officer, director, shareholder, manager, member, partner or otherwise), or engage in, any competing business selling goods or offering services equivalent to BHC Products or the Franchised Business, without Franchisor's express prior written consent, which consent may be withheld in Franchisor's sole and absolute discretion.
- (b) It is the intention of both Franchisee and Franchisor that Franchisee maximizes the Franchised Business within the Territory, and any action of Franchisee that diverts business to another entity or diminishes the Franchised Business being conducted in the Territory will be a material breach of this Agreement. Accordingly, neither Franchisee nor any Principal Equity Operator may, either directly or indirectly, for itself or themselves, or through, on behalf of, or in conjunction with, any person, persons, partnership, corporation or other entity, (i) divert or attempt to divert any business or customer of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or (ii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks or the System.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, franchisees are subject to non-competition covenants during the term of their franchise agreement. Bhc franchisees acknowledge that they will receive specialized training and access to proprietary information, including operational, sales, promotional, and marketing methods and techniques, as well as trade secrets. In return for the use of this information, franchisees agree not to operate, manage, own, assist, or hold an interest in any competing business that sells goods or offers services equivalent to Bhc products or the franchised business. This prohibition extends to direct or indirect involvement as an employee, officer, director, shareholder, manager, member, partner, or in any other capacity, without Bhc's express prior written consent, which Bhc may withhold at its discretion.
Bhc emphasizes that franchisees should maximize the franchised business within their territory. Any action that diverts business to another entity or diminishes the franchised business is considered a material breach of the franchise agreement. Therefore, neither the franchisee nor any principal equity operator may directly or indirectly divert or attempt to divert any business or customer of the franchised business to any competitor through inducement or any other means. Additionally, franchisees are prohibited from performing any act that is injurious or prejudicial to the goodwill associated with the Bhc marks or the system.
These restrictions are designed to protect Bhc's market position and proprietary information. Prospective franchisees should carefully consider these non-competition covenants and how they might affect their other business interests or future opportunities. It is important to understand the scope of these restrictions and the process for obtaining Bhc's consent to engage in any activity that might be considered competitive. Franchisees should seek legal counsel to fully understand the implications of these covenants before signing the franchise agreement.