For Cd One Price Cleaners, what constitutes a 'Competitive Business' during the term of the agreement?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
Therefore, Franchisee covenants that, during the Term, neither Franchisee nor any of its owners, nor any member of the immediate family of Franchisee or any of its owners, shall, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person or legal entity:
15.2.1 Divert or attempt to divert any business or customer of the Store to any Competitive Business (defined below) by inducement or otherwise, or do or perform any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks or the Operating Plans; or
15.2.2 Own any equity interest in, maintain, advise, operate, engage in, be employed by, make loans to, have any other direct or indirect interest in, or otherwise maintain any direct or indirect relationship or association with, a business which offers dry cleaning, finished laundry services and/or other cleaning services for garments or household goods, alteration services, garment or household good repair or restoration services, or any services ancillary thereto (including, without limitation, pickup or delivery of items) (each a "Competitive Business"), wherever located, and including, without limitation, providing any services of a Competitive Business to any other CD Store.
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to Cd One Price Cleaners' 2025 Franchise Disclosure Document, a 'Competitive Business' is defined during the term of the franchise agreement in section 15.2.2. It includes any business that offers dry cleaning, finished laundry services, and/or other cleaning services for garments or household goods. This definition also extends to businesses providing alteration services, garment or household good repair or restoration services, and any services ancillary to these, such as pickup or delivery services. This definition applies regardless of the business's location and includes providing services to any other Cd One Price Cleaners location.
This non-compete clause prevents a franchisee (or their immediate family or owners) from owning, operating, or being involved with any business that directly competes with Cd One Price Cleaners' core services. This restriction is in place to protect the franchisor's market position, operational methods, and confidential information that the franchisee gains access to during the term of the agreement. The franchisee is prohibited from diverting customers or harming the goodwill associated with the Cd One Price Cleaners brand and operating plans.
This clause has significant implications for prospective franchisees. It restricts their ability to engage in any competing business ventures, even indirectly, during the term of the franchise agreement. Franchisees need to be aware that this restriction extends to their immediate family members and owners, ensuring that they cannot circumvent the non-compete clause through family members or business partners. This restriction is broad, covering various aspects of the dry cleaning and laundry service industry, including ancillary services like alterations and delivery.
It is important for potential franchisees to fully understand the scope of this non-compete agreement and how it might affect their other business interests or those of their family members. Franchisees should seek legal counsel to assess the implications of this clause and ensure they are comfortable with the restrictions it places on their business activities during the term of the franchise agreement.