Does the non-compete agreement for Focalpoint Coaching only preclude direct competition, or does it also preclude indirect competition?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
I acknowledge and understand that the provisions of this Agreement, including my representations, covenants, and warranties (as applicable) given hereunder, are necessary and integral to this Agreement and to Company's and Franchisee's interests under the Franchise Agreement, and are intended to:
- (i) preclude not only direct competition, but also all forms of indirect competition, such as consultation for Competitive Businesses, service as an independent contractor for Competitive Businesses, or any assistance or transmission of information of any kind which would be of any material assistance to a competitor;
- (ii) bind any person or entity having any legal or beneficial interest in me, or traceable to, down or through me, including (without limitation) any of member of my Immediate Family, any direct or indirect beneficiary, any partner (general or limited) or proprietor of mine, and any other such related person or entity, regardless of how many levels or tiers there may be between any such described person or entity and me; and
- (iii) identify for me, toward the goal of preserving through this Agreement, Company's protectable legal interests in the System, clients of FocalPoint Franchised Businesses, the Confidential Information, and the goodwill associated with the Marks.
I also expressly acknowledge my possession of skills and abilities of a general nature, and the opportunity for exploiting such skills in other ways than the operation or involvement in the activities of a FocalPoint Franchised Business or a Competitive Business, so that enforcement of my covenants made in this Agreement will not deprive me of my personal goodwill or ability to earn a living after the effective date of expiration or termination of my relationship with Franchisee, the Business, or FocalPoint Franchised Businesses generally. If I fail or refuse to abide by any of my foregoing obligations or promises made under this Agreement, and Company or Franchisee obtains enforcement in a judicial or arbitration proceeding, then my obligations and responsibilities specified under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or Company or Franchisee seeks to enforce it, and will continue for two (2) years starting from the effective date of the order enforcing the covenant.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the non-compete agreement extends beyond just direct competition to include various forms of indirect competition. The agreement is designed to prevent franchisees and related parties from engaging in activities that could materially assist a competitor or harm Focalpoint Coaching's interests. This includes not only direct involvement in a competitive business but also indirect actions such as consulting, serving as an independent contractor, or providing any form of assistance or information to competitors.
The agreement specifically aims to preclude all forms of indirect competition, such as consultation or service as an independent contractor for Competitive Businesses, or any assistance or transmission of information of any kind which would be of any material assistance to a competitor. This broad definition ensures that franchisees cannot bypass the non-compete restrictions through alternative means of supporting rival businesses. The agreement also binds any person or entity with a legal or beneficial interest in the franchisee, including family members and business partners, further reinforcing the scope of the non-compete obligations.
This comprehensive approach reflects Focalpoint Coaching's intent to protect its confidential information, client relationships, and overall goodwill. By preventing both direct and indirect competition, Focalpoint Coaching aims to maintain its market position and prevent franchisees from leveraging their knowledge and resources gained during the franchise term to benefit competing businesses. Prospective franchisees should carefully review these non-compete provisions to understand the full extent of their obligations and how they might impact future business activities after leaving the Focalpoint Coaching system.
It is important to note that the agreement acknowledges the franchisee's general skills and abilities and the opportunity to exploit such skills in ways other than operating or being involved in a Focalpoint Coaching franchise or a Competitive Business. This suggests an attempt to balance the franchisor's need to protect its interests with the franchisee's ability to earn a living after the franchise relationship ends. The agreement also specifies that if a franchisee breaches the non-compete covenant, the obligations will be tolled during the period of the breach and will continue for two years from the date of the enforcement order.