For C3 Wellness Spa, what are some examples of 'Prohibited Activities' during the term of the Franchise Agreement?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
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, 'Prohibited Activities' during the term of the Franchise Agreement include several forms of competitive behavior. Specifically, a franchisee is restricted from owning or having a legal or equitable interest in a Competitive Business, whether as a sole proprietor, owner, partner, member, or shareholder of a corporation, with a minor exception of owning 3% or less in a publicly traded company that is a Competitive Business.
Additionally, franchisees are prohibited from operating, managing, funding, or performing services for a Competitive Business, whether as an employee, officer, director, manager, consultant, representative, agent, or creditor. The agreement also restricts franchisees from diverting or attempting to divert any business or customers from C3 Wellness Spa, its affiliates, or other franchisees.
Furthermore, franchisees are not allowed to induce any customer or client of C3 Wellness Spa, its affiliates, other franchisees, or even the franchisee's own business to another business that is not a C3 Wellness Spa. Engaging in any actions that violate specific articles related to obligations of the agreement also constitutes a 'Prohibited Activity'. These restrictions are designed to prevent unfair competition and protect the interests of the franchisor and the franchise system.