Is there any way for a Face Foundrie Area Developer to be released from the non-compete obligations?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
Area Developer covenants that during the term of this Agreement, except as otherwise approved in writing by Franchisor, Area Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation:
8.2.1 Divert or attempt to divert any business or guest of any Face Foundrié Facial Bar or of any unit under the System to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks or the System.
8.2.2 Unless released in writing by the employer, employ or seek to employ any person who is at that time employed by Franchisor or by any other franchisee or area developer of Franchisor, or otherwise directly or indirectly induce such person to leave his or her employment.
8.2.3 Own, maintain, operate, engage in, be employed by, provide any assistance to, or have any interest in (as owner or otherwise) any Competitive Business (as defined below).
A "Competitive Business" is any business includes any business operating or franchising an establishment (i) at which more than 10% of the offerings consists of facial services or beauty treatments for the face, or (ii) that offers waxing services.
Restrictions in this Agreement on competitive activities do not apply to: (i) the ownership or operation of other Face Foundrié 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; or (e) any or all of the foregoing, Area Developer shall not either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, partnership, corporation, or other entity, own, maintain, operate, engage in, be employed by, or have any interest in any Competitive Business, which is, or is intended to be, located (i) within the Development Area (other than those Franchised Facial Bars provided for in the Development Schedule), or (ii) within a radius of ten (10) miles of the protected territory of any other Face Foundrié Facial Bar in operation or under construction on the effective date of termination or expiration.
Provided, however, that this provision shall not apply to the operation by Area Developer of any business under the System under a franchise agreement with Franchisor.
- 8.4 Exception for Ownership in Public Entities.
Sections 8.2 and 8.3 hereof shall not apply to ownership by Area Developer of less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly held corporation.
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, an Area Developer can be released from non-compete obligations if Face Foundrie approves it in writing. During the term of the Area Development Agreement, the Area Developer is restricted from engaging in any competitive business unless Face Foundrie provides written consent. A competitive business is defined as any establishment where more than 10% of the offerings consist of facial services or beauty treatments for the face, or that offers waxing services.
Even after the Area Development Agreement expires or is terminated, the Area Developer is still bound by non-compete obligations for two years, unless Face Foundrie provides written approval to waive this requirement. This post-term non-compete prevents the Area Developer from owning, operating, or being involved with a competitive business within the Development Area (excluding franchised locations) or within a 10-mile radius of any other Face Foundrie Facial Bar in operation or under construction.
However, these non-compete restrictions do not apply if the Area Developer owns less than 5% of the equity securities of a publicly held corporation. Also, the restrictions do not apply to the operation of other Face Foundrie Facial Bars that are licensed or franchised by Face Foundrie or any of its affiliates. Therefore, the primary way for an Area Developer to be released from these obligations is to obtain written approval from Face Foundrie.