Can a Bumper Man franchisee make loans to a competitive business during the term of the franchise agreement?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| p. Your death or disability | Section 16(f) | Upon death or disability of your Operating Principal or if we determine the death or disability of your Operating Principal adversely affects the operation of the Bumper Business, you must transfer your Operating Principal's interest in you to us or a third party approved by us within two months of such death or disability. |
| q. Non-competition covenants during the term of the franchise | Section 17(a) | You and your principals will not divert any business or customer to a competitor, perform directly or indirectly any act injurious or prejudicial to the goodwill of the Marks and System, and you will not 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. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–38)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, franchisees are restricted from making loans to competitive businesses during the term of the franchise agreement. Specifically, the franchise agreement prohibits franchisees and their principals from engaging in activities that could harm the Bumper Man system.
Section 17(a) of the Bumper Man Franchise Agreement explicitly states that franchisees cannot "make loans to...any competitive business." This restriction is part of the non-competition covenants in place during the franchise term. This means that while operating a Bumper Man franchise, a franchisee is not allowed to provide financial assistance to any business that competes with Bumper Man.
This restriction aims to protect Bumper Man's market position and goodwill by preventing franchisees from supporting rival businesses. It is a fairly standard practice in franchising to include non-compete clauses to ensure franchisees remain committed to the success of the franchise system. Prospective franchisees should carefully consider these restrictions and ensure they do not have any conflicting business interests or plans that would violate this clause.