Can a Body Brain Center franchisee own stock in a publicly traded company that is a Competitive Business?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
You and your Owners agree not to unfairly compete with us during the Term by engaging in any of the following activities ("Prohibited Activities"): (i) owning, operating or having any other interest (as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative or agent) in any Competitive Business, other than owning an interest of five percent (5%) or less in a publicly traded company that is a Competitive Business; (ii) diverting or attempting to divert any business from us (or one of our affiliates or franchisees); (iii) selling any Body & Brain products or services to any person who is a current member of or has a customer agreement with another franchisee or company-owned Body & Brain business without the consent of the owner(s) of the business with whom the person is a member or customer; or (iv) inducing any customer of ours (or of one of our affiliates or franchisees) to transfer their business to you or to any other person that is not then a franchisee of ours.
Source: Item 23 — RECEIPT (FDD pages 43–178)
What This Means (2025 FDD)
According to the 2025 Body Brain Center Franchise Disclosure Document, a franchisee can own a limited amount of stock in a publicly traded company that is considered a Competitive Business. A Competitive Business is defined as any business that competes with Body Brain Center by providing brain-based education, Yoga, Taichi, or Qi-Gong.
Specifically, the franchise agreement states that a franchisee can hold an interest of five percent (5%) or less in a publicly traded company that operates a Competitive Business. This allowance exists both during the term of the franchise agreement and after the term. This provision aims to prevent franchisees from having a significant controlling interest in competing businesses while still allowing for minor investment opportunities.
This policy is fairly standard in the franchise industry, as it allows franchisees to diversify their investments without directly conflicting with their commitment to the Body Brain Center franchise. However, exceeding the 5% ownership threshold would be a violation of the franchise agreement and could have legal ramifications.