What is the exception to the ownership restriction regarding Competitive Businesses for Focalpoint Coaching franchisees?
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);
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, there is an exception to the restriction on franchisees owning an interest in a Competitive Business. Specifically, a Focalpoint Coaching franchisee, any of the franchisee's owners, or their spouses can hold equity ownership of less than two percent (2%) of a Competitive Business without violating the ownership restrictions, provided that the Competitive Business's stock or ownership interests are publicly traded on a recognized United States stock exchange.
This exception allows franchisees to make minor investments in publicly traded companies that might be considered competitive to Focalpoint Coaching without requiring prior written consent from the franchisor. This provides franchisees with some flexibility in managing their investment portfolios without automatically violating the terms of the franchise agreement.
It is important to note that this exception is limited to equity ownership of less than 2% and only applies to Competitive Businesses whose stock is publicly traded on a recognized U.S. stock exchange. Any ownership exceeding this threshold or involvement in a Competitive Business that is not publicly traded would still require the franchisor's prior written consent and could potentially be a violation of the franchise agreement.