What constitutes a 'Competitive Business' that I am restricted from being involved with after leaving Focalpoint Coaching?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, a "Competitive Business" means (i) any business which derives more than twenty percent (20%) of its revenue from selling business training or business consulting services and/or selling or offering products similar to those offered or sold by the Business; or (ii) grants franchises or licenses to others to operate the type of business specified in the preceding subparagraph (i) (other than a FocalPoint Franchised Business operated under a franchise agreement with Company). Despite the foregoing definition of a Competitive Business, nothing under this Agreement or the Franchise Agreement will prevent Individual from owning for investment purposes less than two percent (2%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange, and so long as neither Individual nor Franchisee controls the company in question.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, a "Competitive Business" is defined as any business that meets either of two criteria. First, it includes any business deriving more than twenty percent (20%) of its revenue from selling business training or business consulting services, or from selling products similar to those offered by Focalpoint Coaching. Second, it encompasses any business that grants franchises or licenses to others, allowing them to operate a business similar to Focalpoint Coaching, excluding other Focalpoint Coaching franchises.
This definition has significant implications for a franchisee after their involvement with Focalpoint Coaching ends. The non-compete agreement restricts them from engaging with such businesses in various capacities, including as a proprietor, partner, investor, shareholder, director, officer, employee, principal, agent, advisor, or consultant. This broad restriction aims to prevent both direct and indirect competition, ensuring that former franchisees do not leverage their knowledge and experience gained from Focalpoint Coaching to benefit a competing entity.
However, there is an exception: a franchisee can own less than two percent (2%) of a Competitive Business for investment purposes, provided that the business's stock is publicly traded on a recognized United States stock exchange and neither the franchisee nor their business controls the company. This exception allows for minor investment without triggering the non-compete clause. It is important for prospective franchisees to fully understand these restrictions and their implications, as violating the non-compete agreement could lead to legal consequences.
The restrictions extend for a period of two years after termination or expiration of the franchise agreement and apply not only to the franchisee but also to their immediate family members. The restrictions apply to businesses operating at the former office location, within the territory, within a 25-mile radius of the territory, or within the territory of any other Focalpoint Coaching franchise in operation or under construction. This comprehensive approach aims to protect Focalpoint Coaching's market share, trade secrets, and established network of franchisees.