What are the consequences if a Deer Solution franchisee engages in Prohibited Activities as defined in the agreement?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 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 Deer Solution Business; 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 Deer Solution Business franchisees. 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 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, a franchisee agrees not to participate in Prohibited Activities during the term of the agreement. These activities include owning an interest greater than 3% in a publicly traded Competitive Business, operating or managing a Competitive Business, diverting business from Deer Solution, inducing Deer Solution's customers to other businesses, or violating Articles 6.B and/or 6.C of the agreement. The agreement stipulates that engaging in Prohibited Activities would be unfair and cause harm to Deer Solution, the System, and other franchisees.
The agreement also states that these restrictions apply to the franchisee's Owners and Spouses, who must sign a Franchise Owner and Spouse Agreement and Guaranty. This highlights the importance Deer Solution places on preventing unfair competition and protecting its business interests.
In practical terms, a Deer Solution franchisee must be very careful to avoid any business activities that could be seen as competing with Deer Solution. This includes not only direct competition but also indirect activities such as diverting customers or working for a competitor. The franchisee should ensure that their Owners and Spouses are also aware of these restrictions and agree to abide by them. Failure to comply with these restrictions could result in legal action and damage to the Deer Solution brand.