Does the Face Foundrie Area Developer non-compete apply after a transfer of the agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
ié Facial Bars that are licensed or franchised by Franchisor or any of its Affiliates; or (b) the ownership of shares of a class of securities that are listed on a public stock exchange or traded on the over-the-counter market and that represent less than five percent (5%) of that class of securities. Area Developer acknowledges and agrees that Area Developer shall be considered in default under this Agreement and that this Agreement will be subject to immediate termination as provided in Section 6.2 herein, in the event that a person in the immediate family (including spouse, domestic partner, parent or child) of Area Developer (or, if Area Developer is other than an individual, each Principal that is subject to these covenants) engages in a Competitive Business that would violate this Section 8.2.3 if such person was subject to the covenants of this Section 8.2.3.
- 8.3 After the Agreement and After a Transfer*.* Area Developer covenants that, except as otherwise approved in writing by Franchisor, for a continuous uninterrupted period of two (2) years from the date of (a) a transfer permitted under Section 7 above; (b) expiration of this Agreement; (c) termination of this Agreement (regardless of the cause for termination); (d) a final order of a duly authorized arbitrator, panel of arbitrators, or a court of competent jurisdiction (after all appeals have been taken) with respect to any of the foregoing or with respect to enforcement of this Section 8.3;
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the Area Developer's non-compete obligations extend for two years after a permitted transfer of the Area Development Agreement. Specifically, for a period of two years after the date of a transfer, the Area Developer is restricted from engaging in any Competitive Business.
A Competitive Business includes any business operating or franchising an establishment where more than 10% of the offerings consist of facial services or beauty treatments for the face, or that offers waxing services. This restriction applies within the Development Area (excluding franchised locations) and within a 10-mile radius of any other Face Foundrie Facial Bar in operation or under construction on the date of termination or expiration.
However, this non-compete provision does not prevent the Area Developer from operating a business under the Face Foundrie system through another franchise agreement with the company. Additionally, the restriction does not apply to ownership of less than 5% of the equity securities of a publicly held corporation. Therefore, a prospective Face Foundrie Area Developer should be aware that transferring the agreement does not eliminate the non-compete obligations for two years.