What agreements must the remaining owners of a Clear Pest Pros franchise sign?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
Before attending the Initial Training and/or upon any change to the legal entity ownership, you must submit to us a corporate resolution, or similar action, which states the name of the corporation or LLC, the legal names of all of the partners or shareholders, the percentage of
ownership that each member controls, their place of residence and their agreement to be bound by the terms of the Franchise Agreement. In the case of multiple owners, you must submit a dispute resolution procedure acceptable to us in our sole discretion that states what you will do in the event that there is a conflict between any owners of the franchisee entity. In addition, at all times, the owners who have executed the Franchise Agreement must control 67% of the franchisee entity. The remaining Owners must sign a personal guaranty, written agreement to maintain confidentiality of the trade secrets and their agreement to abide by the covenant not to compete, as described in Sections 6 and 13 of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to the 2025 Clear Pest Pros Franchise Disclosure Document, in cases where there are multiple owners of a franchise, all owners who have executed the Franchise Agreement must collectively control at least 67% of the franchisee entity. The remaining owners are required to sign a personal guaranty, a written agreement to maintain the confidentiality of trade secrets, and an agreement to abide by the covenant not to compete, as detailed in Sections 6 and 13 of the Franchise Agreement.
This requirement ensures that all owners are legally bound to uphold the standards and obligations set forth by Clear Pest Pros. The personal guaranty means that the remaining owners are personally liable for the financial obligations of the franchise. The confidentiality agreement protects Clear Pest Pros's proprietary information, preventing it from being disclosed or used inappropriately. The non-compete agreement restricts the owners from engaging in any competing business activities that could harm the Clear Pest Pros franchise.
For a prospective Clear Pest Pros franchisee, this means that if you are entering into a franchise agreement with multiple owners, it is crucial to understand these requirements and ensure that all parties are willing to sign the necessary documents. Failure to comply with these requirements could result in legal and financial repercussions for all owners involved. It is also important to carefully review Sections 6 and 13 of the Franchise Agreement to fully understand the scope and limitations of the non-compete agreement.
This is a fairly standard practice in franchising, as franchisors typically want to ensure that all individuals with an ownership stake are committed to the brand and its standards. By requiring these agreements, Clear Pest Pros aims to protect its brand, trade secrets, and overall business interests.