Can a 'Covered Person' own an interest in a Competitive Business during the term of the Boulder Designs franchise agreement?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that Franchisor would be unable to protect the Trade Secrets and other Confidential Information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information among Boulder Designs franchisees if owners of BOULDER DESIGNS Businesses, and Covered Persons were permitted to hold an interest in or perform services for any Competitive Business. Therefore, during the term of this Agreement, neither Franchisee nor Covered Persons, either directly or indirectly, for themselves, or through, on behalf of or in conjunction with any person, partnership, corporation, Limited Liability Company or other business entity, shall:
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, during the term of the franchise agreement, neither the franchisee nor any 'Covered Persons' can directly or indirectly hold an interest in or perform services for a Competitive Business. This restriction applies to themselves, or through, on behalf of or in conjunction with any person, partnership, corporation, Limited Liability Company or other business entity.
Boulder Designs imposes this restriction to protect its trade secrets and confidential information, and to encourage the free exchange of ideas among its franchisees. The company believes that allowing owners and 'Covered Persons' to have an interest in competing businesses would undermine these objectives.
This clause means a Boulder Designs franchisee must ensure that they and any 'Covered Persons' associated with their franchise do not become involved with any business that competes with Boulder Designs during the term of their franchise agreement. This is a fairly standard restriction in franchising, designed to protect the franchisor's business model and market share.