Does the non-competition agreement for Face Foundrie restrict a franchisee from being an employee of a Competitive Business during the term of the agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
has the right to set-off amounts Franchisee owes Franchisor against any amounts Franchisor may owe Franchisee. Franchisee agrees not to set off or withhold payment of any monthly or other amounts due to Franchisor or its Affiliates, due to the nonperformance or alleged nonperformance by Franchisor of any of its obligations hereunder.
7. RESTRICTIVE COVENANTS.
7.01 Covenants Not to Compete.
- (a) Non-Competition during Term. In addition to and not in limitation of any other restrictions on Franchisee contained herein, Franchisee and Franchisee's spouse, and, if Franchisee is not an individual, each of its Owners and their spouses (each, a "Restricted Party"), agree that they will not, directly or indirectly, for and on behalf of itself, himself, herself or any other Person, without the prior written consent of Franchisor, during the Term (i) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, regardless of location or (ii) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business, regardless of location.
- (b) Post-Term Non-Competition. In addition to and not in limitation of any other restrictions on Franchisee contained herein, Franchisee and the Restricted Parties agree that they will not, for two (2) years following the effective date of termination or expiration of this Agreement for any reason, or following the date of a Transfer by Franchisee, or, with respect to a Restricted Party only, by such Restricted Party, directly or indirectly, for and on behalf of itself, himself, herself or any other Person, without the prior written consent of Franchisor, (i) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business or (ii) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business which, in either case, is located or operating within a ten (10) mile radius of the protected territory of any Face Foundrié Facial Bar in operation or under construction on the effective date of termination or expiration.
- (c) General. The parties acknowledge that the covenants contained in this Section 7.01 are given in consideration of the fact that Franchisee and the Restricted Parties will possess knowledge of
Franchisor's business and operating methods and Confidential Information, disclosure and use of which would prejudice the interest of Franchisor and its franchisees and licensees of other Face Foundrié Facial Bars.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the non-competition agreement restricts a franchisee from being an employee of a Competitive Business during the term of the agreement. During the term of the franchise agreement, the franchisee, their spouse, and if the franchisee is not an individual, each of its owners and their spouses, are restricted. They cannot have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, regardless of location. They are also prohibited from performing services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business, regardless of location, without prior written consent from Face Foundrie.
A "Competitive Business" is defined as any business operating or franchising an establishment where more than 10% of its offerings consist of facial services or beauty treatments for the face, or that offers waxing services. However, these restrictions do not apply to the ownership or operation of other Face Foundrié Facial Bars that are licensed or franchised by Face Foundrie or its affiliates, or 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.
This non-compete clause ensures that franchisees and related parties are fully dedicated to the success of their Face Foundrie franchise during the term of the agreement. It prevents them from diverting resources, knowledge, or expertise to competing businesses. The restrictions are in place to protect Face Foundrie's market position and confidential business information. A prospective franchisee should carefully consider these restrictions and ensure they do not conflict with any existing business interests or employment obligations.