What does 'Competing Business' mean for a Cost Cutters Family Hair Salon tenant?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
receive specialized training, current and future marketing and advertising plans, business plans and strategies, business information and procedures, research and development information, operations information, and trade and business secrets from COST CUTTERS pertaining to the Business System of a Cost Cutters business. In consideration for the use and license of such valuable and confidential information, the FRANCHISEE, the FRANCHISEE'S shareholders and the Personal Guarantors will comply in all respects with the provisions of this Article. COST CUTTERS has advised the FRANCHISEE that this provision is a material provision of this Agreement.
- 12.2 IN-TERM COVENANT NOT TO COMPETE. The FRANCHISEE, the FRANCHISEE'S shareholders, partners or members and the Personal Guarantors will not, during the term of this Agreement, on their own account or as an employee, agent, consultant, partner, officer, director or shareholder of any other person, firm, entity, partnership, limited liability company or corporation own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any hairstyling, barber or other business that is in any way competitive with or similar to the Cost Cutters businesses operated by COST CUTTERS or COST CUTTERS' franchisees, except other salons franchised to FRANCHISEE by COST CUTTERS or its subsidiaries or affiliates.
- 12.3 POST-TERM COVENANT NOT TO COMPETE. The FRANCHISEE, the FRANCHISEE'S shareholders, partners or members and the Personal Guarantors will not, for a period of two (2) years after the termination or expiration of this Agreement, on their own account or as an employee, agent, consultant, partner, member, officer, director or shareholder of any other person, firm, entity, partnership, limited liability company, or corporation own, operate, lease, franchise, conduct, engage in, be connected with, have any interest in or assist any person or entity engaged in any hairstyling, barber or other business that is in any way competitive with or similar to the Cost Cutters businesses conducted by COST CUTTERS or COST CUTTERS' franchisees, which is located within six (6) miles of either the Franchised Location or any other Cost Cutters businesses operated by COST CUTTERS or any of COST CUTTERS' franchisees, which is or which is located within any development area granted by COST CUTTERS or any affiliate or area developer of COST CUTTERS pursuant to any franchise, development, license or other territorial agreement.
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon FDD, a 'Competing Business' is defined both during the term of the franchise agreement and after its termination or expiration. During the term of the agreement, the franchisee, their shareholders, partners, members, and personal guarantors are prohibited from owning, operating, or being involved with any hairstyling, barber, or other business that is competitive with or similar to Cost Cutters Family Hair Salon, except for other salons franchised by Cost Cutters Family Hair Salon or its affiliates. This restriction applies to their actions as owners, employees, agents, consultants, partners, officers, directors, or shareholders of any entity.
After the franchise agreement terminates or expires, the restrictions continue for two years. During this period, the franchisee and related parties cannot engage in any competitive hairstyling, barber, or similar business within six miles of the franchised location or any other Cost Cutters Family Hair Salon business. This also includes businesses within any development area granted by Cost Cutters Family Hair Salon or its affiliates. The restrictions apply in similar roles as during the term, including owner, employee, agent, consultant, partner, member, officer, director, or shareholder.
Cost Cutters Family Hair Salon also acknowledges that other hair salon franchises owned by The Barbers, such as Smartstyle® and Holiday Hair®, may be competitive with Cost Cutters Family Hair Salon businesses. The franchisee waives any rights to make claims against Cost Cutters Family Hair Salon resulting from the opening of these other salon businesses, even if they are near the franchisee's Cost Cutters Family Hair Salon location. Similarly, the franchisee acknowledges that Regis Salons, Supercuts, Pro-Cuts, Roosters, MasterCuts, Hairmasters, SmartStyle, Cool Cuts 4 Kids, Haircrafters, Holiday Hair and Great Expectations may be competitive with Cost Cutters Family Hair Salon.