Can a Focalpoint Coaching franchisee engage in activities that might injure the goodwill of the Marks or Franchise System?
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).
Franchisee agrees to obtain similar covenants from the personnel Franchisor specifies, including officers, directors, managers, Associates and other employees attending Franchisor's training program or having access to Confidential Information. Franchisor has the right to regulate the form of agreement that Franchisee uses and to be a third party beneficiary of that agreement with independent enforcement rights.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, a franchisee is explicitly prohibited from engaging in any activity that, in the franchisor's opinion, might harm the goodwill of the Marks or the Franchise System. This restriction is in place during the term of the Franchise Agreement, including any renewal terms. This is to protect the brand's reputation and maintain consistent standards across all Focalpoint Coaching franchises.
Specifically, the franchisee, their owners, and their spouses are restricted from having any direct or indirect interest in a Competitive Business, performing services for a Competitive Business, diverting business or clients to a Competitive Business, or engaging in any activity that could harm the goodwill of the Marks or Franchise System. A Competitive Business is defined as one that derives more than 20% of its revenue from selling business training or consulting services, or grants franchises or licenses to others to operate a similar type of business.
There is an exception: owning less than 2% of a publicly traded Competitive Business is permitted, provided that neither the franchisee nor the individual controls the company. Focalpoint Coaching also requires franchisees to obtain similar covenants from specified personnel, such as officers, directors, managers, Associates, and other employees who attend training or have access to confidential information. The franchisor has the right to regulate the form of agreement used and to be a third-party beneficiary with independent enforcement rights.
This clause ensures that franchisees remain committed to the Focalpoint Coaching system and do not use their knowledge or resources to benefit competing businesses, thereby protecting the brand's integrity and market position. Prospective franchisees should carefully consider these restrictions and ensure they are comfortable with the limitations on their business activities during and potentially after the franchise term.