For Focalpoint Coaching, does the covenant not to compete apply to the franchisee's owners, and if so, in what capacity?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
correspondence between the parties and any other documents which Franchisee reasonably needs for compliance with any provision of law. Franchisee agrees that the foregoing items, materials, client lists, files, software and other similar items are at all times considered to be Franchisor's property for all purposes.
D. COVENANT NOT TO COMPETE.
Upon the termination or expiration of this Agreement, Franchisee and Franchisee's owners agree that, for two (2) years beginning on the effective date of termination or expiration of this Agreement (or upon a transfer as provided in Subsection 12.C(12) above), whichever is later, neither Franchisee nor any of Franchisee's owners will have any direct or indirect interest (e.g., through a spouse) as an owner (whether of record, beneficially, or otherwise), investor, partner, director, officer, employee, consultant, representative, or agent in any Competitive Business (as defined in Section 7 above) located or operating:
- (i) at the premises where the Office is located;
- (ii) within the Territory;
- (iii) within a twenty-five (25) mile radius of the Territory;
- (iv) within the Territory of any other FocalPoint Franchised Business in operation or in the process of opening on the later of the effective date of the termination or expiration of this Agreement or the date on which all persons restricted by this Subsection 15.D begin to comply with this Subsection 15.D.
E. COVENANT NOT TO SOLICIT.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the covenant not to compete applies to both the franchisee and the franchisee's owners. Upon termination or expiration of the Franchise Agreement, both the franchisee and their owners are restricted from having any direct or indirect interest in a Competitive Business for a period of two years. This restriction includes acting as an owner, investor, partner, director, officer, employee, consultant, representative, or agent.
The restrictions apply to any Competitive Business located or operating at the premises where the Focalpoint Coaching office was located, within the territory granted to the franchisee, within a 25-mile radius of that territory, or within the territory of any other Focalpoint Coaching franchise. The non-compete obligations also include a covenant not to solicit, preventing the franchisee and their owners from soliciting clients of Focalpoint Coaching or its affiliates for two years after termination or expiration of the agreement.
These covenants are designed to protect Focalpoint Coaching's market share, trade secrets, and client relationships. The broad scope of these restrictions means that a franchisee and their owners need to carefully consider the implications for their future business activities should they decide to leave the Focalpoint Coaching system. The definition of "Competitive Business" is also important, as it includes businesses deriving more than 20% of their revenue from business training or consulting services, or businesses that franchise similar concepts.
It is important to note that in certain states like North Dakota, covenants not to compete may be considered unenforceable. However, Focalpoint Coaching states that it will seek to enforce them to the extent enforceable, so franchisees in such states should be aware of the potential for legal action. Prospective franchisees should seek legal counsel to fully understand the enforceability and implications of these covenants in their specific jurisdiction.