What is the scope of the non-disparagement clause regarding the Extreme Art Studio brand's reputation and goodwill?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.6 NON-DISPARAGEMENT.
You agree not to (and to use your best efforts to cause your current and former shareholders, members, officers, directors, principals, agents, partners, employees, representatives, attorneys, spouses, affiliates, successors and assigns, not to) disparage or otherwise speak or write negatively, directly, or indirectly, of us, our affiliates, any of our or our affiliates' directors, officers, employees, representatives or affiliates, current and former franchisees of us or our affiliates, the Extreme Art Studio brand, the System, any Extreme Art Studio Business, any business using the Marks, any other brand or service-marked or trademarked concept of us or our affiliates, or which would subject the Extreme Art Studio brand or such other brands to ridicule, scandal, reproach, scorn, or indignity, or which would negatively impact the goodwill of us, the Extreme Art Studio brand, or such other brands.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, franchisees must not disparage Extreme Art Studio. This non-disparagement clause extends broadly, covering not only the franchisee but also their current and former shareholders, members, officers, directors, principals, agents, partners, employees, representatives, attorneys, spouses, affiliates, successors, and assigns.
The clause prohibits any negative comments, whether spoken or written, directly or indirectly, about Extreme Art Studio, its affiliates, directors, officers, employees, representatives, current and former franchisees, the Extreme Art Studio brand, the System, any Extreme Art Studio Business, any business using the Marks, or any other brand or service-marked or trademarked concept of Extreme Art Studio or its affiliates. The clause also covers anything that would subject the Extreme Art Studio brand or other brands to ridicule, scandal, reproach, scorn, or indignity, or negatively impact the goodwill of Extreme Art Studio or such other brands.
This type of clause is common in franchise agreements to protect the brand's reputation. However, the breadth of individuals covered by the clause is notable. Prospective Extreme Art Studio franchisees should understand that this obligation extends to a wide range of people associated with them, and they are responsible for ensuring these parties also refrain from disparaging the brand. This could be challenging to enforce in practice, but the franchisee is contractually obligated to use their best efforts to ensure compliance.