factual

What is the consequence of engaging in a Prohibited Activity while being an Owner of a Dryer Vent Squad franchise?

Dryer_Vent_Squad Franchise · 2024 FDD

Answer from 2024 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 Dryer Vent Squad 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 Dryer Vent Squad Business franchisees. Franchisee agrees that the foregoing covenants and obligations shall also apply to Franchisee's Owners and that Franchisee's Owners shall each execute and deliver to Franchisor the Franchise Owner Agreement and Individual Guaranty in the form attached to this Agreement as Exhibit 1.

Source: Item 23 — RECEIPTS (FDD pages 51–207)

What This Means (2024 FDD)

According to the 2024 Dryer Vent Squad FDD, if a franchisee engages in Prohibited Activities, it is considered unfair competition that would cause harm to Dryer Vent Squad, the Dryer Vent Squad system, and other Dryer Vent Squad franchisees.

The Dryer Vent Squad franchise agreement specifies that the restrictive covenants and obligations regarding Prohibited Activities also apply to the franchisee's Owners. To ensure compliance, Dryer Vent Squad requires that each Owner execute and deliver a Franchise Owner Agreement and Individual Guaranty.

This measure underscores the importance Dryer Vent Squad places on protecting its brand and franchise network from unfair competition. By extending these obligations to the Owners and requiring signed agreements, Dryer Vent Squad aims to ensure that all parties with a significant interest in the franchise are committed to upholding the terms of the franchise agreement and preventing activities that could harm the system.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.