What is the definition of 'owner' in the Focalpoint Coaching franchise agreement?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee therefore agrees that, during this Agreement's term and any renewal term, and unless Franchisor provides prior written consent in its sole discretion, neither Franchisee, any of Franchisee's owners, nor any of Franchisee's or Franchisee's owners' spouses will:
- (a) have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business, wherever located or operating (except that equity ownership of 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 will not be deemed to violate this subparagraph);
- (b) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (c) divert or attempt to divert any actual or potential business or client of the Franchised Business or any FocalPoint Franchised Business to a Competitive Business; or
- (d) engage in any other activity which, in Franchisor's sole opinion, might injure the goodwill of the Marks or Franchise System.
The term "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 products similar to the Proprietary Products or (ii) any business granting franchises or licenses to others to operate the type of business specified in subparagraph (i) (other than a FocalPoint Franchised Business operated under a franchise agreement with Franchisor).
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the term 'owner' is referenced within the context of restrictions placed on the franchisee during the agreement's term and any renewal term. Specifically, neither the franchisee, any of the franchisee's owners, nor their spouses can have a direct or indirect controlling or non-controlling interest as an owner in a Competitive Business. This restriction applies regardless of whether the interest is of record, beneficial, or otherwise. An exception exists for equity ownership of less than two percent (2%) of a Competitive Business if its stock is publicly traded on a recognized United States stock exchange.
This clause aims to prevent Focalpoint Coaching franchisees from engaging in or benefiting from businesses that directly compete with the Focalpoint Coaching franchise. The definition of 'Competitive Business' includes any business deriving more than twenty percent (20%) of its revenue from selling business training or consulting services, or from selling products similar to Focalpoint Coaching's proprietary products. It also includes businesses that grant franchises or licenses to others to operate similar businesses.
For a prospective Focalpoint Coaching franchisee, this means that they, their spouses, and any individuals considered 'owners' are significantly restricted from participating in competing businesses during the term of the franchise agreement. This is a common clause in franchise agreements to protect the franchisor's brand and market share. Franchisees should carefully consider these restrictions, especially if they have existing business interests or plan to have them in the future. It is important to understand who the franchisor considers an 'owner' for the purposes of this clause, as it could extend beyond the franchisee themselves to include spouses or other family members with a financial interest.