Does the Focalpoint Coaching Nondisclosure and Non-Competition Agreement specify any financial thresholds related to the use of confidential information for Focalpoint Coaching?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Despite the foregoing definition of a Competitive Business, nothing under this Agreement or the Franchise Agreement will prevent Individual from owning for investment purposes 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, and so long as neither Individual nor Franchisee controls the company in question.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the Nondisclosure and Non-Competition Agreement does include a financial threshold related to ownership in a competitive business. Specifically, the agreement states that owning less than 2% of a publicly traded Competitive Business does not violate the agreement, provided that neither the individual nor the franchisee controls the company. A "Competitive Business" is defined as any business deriving more than 20% of its revenue from selling business training or consulting services, or franchising similar businesses. This clause aims to prevent franchisees from engaging in activities that directly compete with Focalpoint Coaching while allowing for minor investment opportunities.
This provision allows a franchisee to hold a small investment in a competing business without violating the non-compete agreement, as long as the ownership stake is less than 2% and the franchisee does not control the competing company. This is a fairly standard exception in franchise agreements, as it allows franchisees to diversify their investments without necessarily posing a competitive threat to the franchisor. The 2% threshold is designed to ensure that the franchisee's financial interest in the competing business is minimal and does not incentivize them to undermine the Focalpoint Coaching franchise.
For a prospective Focalpoint Coaching franchisee, this means they can invest in publicly traded companies that might be considered competitive businesses, provided their ownership remains below the 2% threshold and they have no controlling influence. This offers some flexibility in personal investments without breaching the franchise agreement. However, it's crucial for franchisees to remain compliant with these conditions to avoid potential legal repercussions from Focalpoint Coaching. It is important to note that this exception applies only to publicly traded companies; any ownership in a privately held competitive business, regardless of the percentage, could be a violation of the agreement.