What actions are considered 'indirectly' engaging in a Competitive Business against Buff City Soap?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) Own, maintain, operate, be employed by, engage in, franchise, lease property to, advise, help, make loans to, or have any interest in, either directly or indirectly, any Competitive Business. During the Term, these restrictions apply to any Competitive Business located within the United States (excluding Developer's Existing Brands). Following the expiration of the Term, termination of this Agreement, or an approved Transfer of this Agreement and with respect to a Principal, following the date the Principal ceases to be a Principal under this Agreement, this restriction will apply to any Competitive Business located (1) within the Territory; (2) at or within three miles of any Buff City Soap Makery then operating or under construction within or outside the United States, except as otherwise approved in writing by Franchisor.
(k) "Competitive Business" means any retail establishment that, as determined by Franchisor, is the same as or substantially similar to the Makeries, including, without limitation, any personal body care product retail establishment or chain of retail establishments that feature products free of artificial detergents, surfactants, dyes, or harsh chemicals, or any retail establishment that has soaps, lotions, bath bombs and similar facial, body and hair care products collectively accounting for 25% or more of its average monthly gross sales for the retail establishment during the preceding 12 months (or, if the retail establishment has operated less than 12 months, the number of full calendar months of operation).
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, franchisees and their principals are restricted from engaging in competitive business activities, either directly or indirectly, during the term of the agreement and for two years afterward. Indirectly engaging in a competitive business includes owning, maintaining, operating, being employed by, engaging in, franchising, leasing property to, advising, helping, or making loans to a Competitive Business, or having any interest in a Competitive Business.
A "Competitive Business" is defined as any retail establishment that the Franchisor determines to be the same as or substantially similar to a Buff City Soap Makery. This includes, but is not limited to, any personal body care product retail establishment or chain of retail establishments that feature products free of artificial detergents, surfactants, dyes, or harsh chemicals, or any retail establishment that has soaps, lotions, bath bombs and similar facial, body and hair care products collectively accounting for 25% or more of its average monthly gross sales for the retail establishment during the preceding 12 months (or, if the retail establishment has operated less than 12 months, the number of full calendar months of operation).
These restrictions apply within the United States during the term of the agreement, excluding the franchisee's existing brands. After the agreement expires, is terminated, or an approved transfer occurs, the restrictions apply within the franchisee's territory and within three miles of any Buff City Soap Makery then operating or under construction, both inside and outside the United States, unless otherwise approved in writing by Buff City Soap. This means a franchisee cannot support a competing business through investment, consultation, or employment, even if they are not directly operating it.
This non-compete clause is fairly standard in franchising to protect the brand and system. However, prospective franchisees should carefully consider the scope of these restrictions, especially the geographic limitations after the franchise term, to ensure they do not unduly limit future business opportunities. It is also important to understand how Buff City Soap defines a "Competitive Business" to avoid unintentional violations.