factual

What business practices are C3 Wellness Spa franchisees prohibited from engaging in?

C3_Wellness_Spa Franchise · 2024 FDD

Answer from 2024 FDD Document

6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS

Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business; (c) diverting or attempting to divert any business or customers from Franchisor or, one of Franchisor's affiliates or franchisees; (d) inducing any customer or client of Franchisor, Franchisor's affiliates, franchisees of the System, or, of Franchisee, to any other person or business that is not a Spa and/or Spa Location Franchise; and/or (e) engaging in any actions, inactions, and/or activities in violation of Articles 6.B. and/or 6.C. of this Agreement (all, individually and, collectively, referred to as the "Prohibited Activities"). Franchisee agrees that if Franchisee were to engage in the Prohibited Activities that such actions would be unfair, would constitute unfair competition and would cause harm to Franchisor, the System and other Spas and/or Spa Location Franchises. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.

Source: Item 23 — RECEIPTS (FDD pages 59–293)

What This Means (2024 FDD)

According to C3 Wellness Spa's 2024 Franchise Disclosure Document, franchisees are restricted from certain activities during the term of their agreement. These prohibited activities, considered unfair competition, include owning or having a legal or equitable interest in a Competitive Business, with a minor exception of owning 3% or less in a publicly traded company that is a Competitive Business. A Competitive Business is defined as one similar to a C3 Wellness Spa, offering similar spa services or management services.

Furthermore, franchisees are prohibited from operating, managing, funding, or performing services for a Competitive Business, whether as an employee, officer, director, or in any similar capacity. They cannot divert or attempt to divert business or customers from C3 Wellness Spa, its affiliates, or other franchisees. Inducing customers or clients of C3 Wellness Spa to another business that is not a C3 Wellness Spa is also forbidden. Engaging in any actions violating specific articles within the agreement also constitutes a prohibited activity.

These restrictions also apply to the franchisee's owners and spouses, who are required to sign a Franchise Owner and Spouse Agreement and Guaranty. C3 Wellness Spa emphasizes that engaging in these prohibited activities would be unfair, constitute unfair competition, and cause harm to the franchisor, the system, and other C3 Wellness Spa locations. This comprehensive list of prohibited activities aims to protect the C3 Wellness Spa brand and maintain fair competition within the franchise system.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.