Is a Dryer Vent Squad franchisee allowed to divert business from the Franchisor's affiliates?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer 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 Dryer Vent Squad's 2024 Franchise Disclosure Document, franchisees are explicitly prohibited from diverting business away from the franchisor or its affiliates during the term of the franchise agreement. This restriction is part of the in-term non-competition obligations that a franchisee agrees to.
Specifically, the franchise agreement states that franchisees cannot divert or attempt to divert any business or customers from Dryer Vent Squad, its affiliates, or other franchisees. This includes actively trying to redirect customers to other businesses or entities that are not part of the Dryer Vent Squad system. This restriction is in place to protect the integrity of the Dryer Vent Squad brand and the interests of all franchisees within the system.
Engaging in such prohibited activities is considered unfair competition and a breach of the franchise agreement, which could result in harm to Dryer Vent Squad and its franchisees. The agreement also extends these obligations to the franchisee's owners, who must also sign agreements acknowledging these restrictions. This ensures that all parties involved are aware of and compliant with the non-competition terms.
This type of clause is common in franchise agreements to protect the brand and prevent franchisees from using the franchisor's resources and reputation to benefit competing businesses. Prospective Dryer Vent Squad franchisees should understand these restrictions and ensure they are committed to growing their business within the bounds of the franchise agreement.