What is the definition of 'Prohibited Activities' for managers or officers of an Extreme Art Studio franchise?

According to Extreme Art Studio's 2024 Franchise Disclosure Document, "Prohibited Activities" are defined within the context of the System Protection Agreement that managers or officers of a franchisee must adhere to. These activities consist of two primary restrictions. First, a manager or officer is prohibited from owning, operating, or having any interest in a Competitive Business. The definition of 'interest' is broad, including roles as an owner, partner, director, officer, employee, manager, consultant, shareholder, creditor, representative, agent, or any similar capacity. However, an exception exists for owning an interest of five percent (5%) or less in a publicly-traded company that is considered a Competitive Business.

Second, "Prohibited Activities" include diverting or attempting to divert any business away from Extreme Art Studio itself, its affiliates, or its other franchisees. This is to prevent individuals with knowledge of the Extreme Art Studio system from leveraging that knowledge to unfairly draw business away from the established franchise network.

These restrictions are in place to protect Extreme Art Studio's business model, trade secrets, and overall franchise system. By agreeing to these terms, managers and officers acknowledge the importance of maintaining the integrity of the Extreme Art Studio brand and preventing unfair competition. Prospective franchisees should carefully review these definitions and understand the implications for themselves and their management team.