What activities are prohibited under the Big Blue Swim School non-compete agreement?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
usively with us with respect to the services and products that BIG BLUE Swim Schools offer and sell. You therefore agree that, during the Term, neither you, your owners, nor any members of your or their Immediate Families (defined below) will:
- (1) have any direct or indirect, controlling or non-controlling interest as an owner—whether of record, beneficial, or otherwise—in a Competitive Business (defined below), wherever located or operating, provided that this restriction will not prohibit ownership of shares of a class of securities publicly-traded on a United States stock exchange and representing less than three percent (3%) of the number of shares of that class of securities issued and outstanding;
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (3) directly or indirectly loan any money or other thing of value, or guarantee any other person's loan, to any Competitive Business or any owner, director, officer, manager, or employee of any Competitive Business, wherever located or operating;
- (4) divert or attempt to divert any actual or potential business or customer of the School to a Competitive Business; or
- (5) solicit other franchisees, or use available lists of franchisees, for any commercial purpose other than purposes directly related to the School's operation.
The term "Competitive Business," as used in this Agreement, means any (a) business that provides swim lessons, swim skills, or swim activities for children ranging in age from three (3) months to twelve (12) years old, or (b) business granting franchises or licenses to others to operate the type of business described in clause (a), other than a BIG BLUE Swim School operated under a franchise agreement with us.
The term "Immediate Family" includes the named individual, his or her spouse or domestic partner, and all children of the named individual or his or her spouse or domestic partner. You agree to obtain similar covenants from your officers, directors, and other supervisory personnel, to the extent permitted by applicable Law, to the extent their competitive activities would adversely affect your School or the BIG BLUE Swim School brand. We may pre-approve the forms of agreements you use solely to ensure that you adequately protect Confidential Information and the competitiveness of BIG BLUE Swim Schools. Under no circumstances will we control the forms or terms of employment agreements you use with School employees or otherwise be responsible for your labor relations or employment practices.
12.B. Directives
If there is a dispute related to this Section 12 or Section 20.F, you and your owners direct any third party construing this Section or Section 20.F, including any court, arbitrator, mediator, master, or other party acting as trier-of-fact or law:
- (1) To presume conclusively that the restrictions set forth in this Section and in Section 20.F are reasonable and necessary in order to protect (a) our legitimate business interests, including the interests of our other franchisees, (b) the confidentiality of Confidential Information, (c) the integrity of the Franchise System, (d) our investment in the Franchise System, (e) the investment of our other franchisees in their franchised BIG BLUE Swim Schools, and (f) the goodwill associated with the Franchise System;
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School Franchise Disclosure Document, the non-compete agreement outlines several prohibited activities for franchisees and their owners, both during the term of the agreement and after termination or expiration. During the agreement, franchisees are restricted from having any ownership interest in a competitive business, performing services for a competitive business, or providing financial support to a competitive business. They are also prohibited from diverting business or customers away from Big Blue Swim School and from soliciting other franchisees for commercial purposes unrelated to the school's operation. A competitive business is defined as one that provides swim lessons, swim skills, or swim activities for children aged three months to twelve years, or franchises similar businesses.
Upon termination or expiration of the franchise agreement, the restrictions become more geographically focused. Franchisees and their immediate families are prohibited from having an ownership interest in or performing services for a competitive business located at the school's site or within ten miles of the school's site. This restriction also applies within ten miles of any other Big Blue Swim School in operation or under construction. However, an exception exists for owning less than 3% of a publicly-traded company's shares.
These non-compete clauses are designed to protect Big Blue Swim School's market share, trade secrets, and franchise system. Prospective franchisees should carefully consider these restrictions, as they could limit their future business opportunities, especially if they decide to leave the Big Blue Swim School system. It is common practice in the franchise industry to have non-compete agreements, but the specific terms can vary significantly. Franchisees should seek legal counsel to fully understand the implications of these restrictions before signing the franchise agreement.