Does the Chem-Dry franchise agreement prevent a franchisee's adult offspring from having a controlling interest in a Competitive Business during the term of the agreement?

According to Chem-Dry's 2024 Franchise Disclosure Document, the franchise agreement does place restrictions on a franchisee's adult offspring regarding involvement in competitive businesses during the term of the agreement. Specifically, the agreement states that neither the franchisee, nor any owner, manager, officer, partner, or director of the franchisee (if an entity), nor their respective spouses and adult offspring, can have a direct or indirect controlling or non-controlling interest in a Competitive Business. This restriction applies regardless of where the Competitive Business is located or operating.

However, there is an exception to this rule. The agreement states that equity ownership of less than two percent (2%) of a Competitive Business will not be deemed a violation if the shares or other forms of ownership interest are publicly traded on a recognized United States securities exchange.

In essence, Chem-Dry aims to prevent franchisees and their immediate family members from engaging in activities that could harm the Chem-Dry brand or franchise system. This is a fairly standard practice in franchising, as franchisors seek to protect their brand, trade secrets, and customer relationships. Franchisees should carefully consider these restrictions and ensure they do not conflict with their family's existing or planned business ventures.