For Focalpoint Coaching, what is prohibited under the covenant not to compete regarding involvement in a Competitive Business?
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 the 2025 Focalpoint Coaching Franchise Disclosure Document, during the term of the agreement, franchisees, their owners, and their spouses are restricted from certain activities related to competitive businesses. Unless Focalpoint Coaching provides prior written consent, franchisees are prohibited from having any direct or indirect controlling or non-controlling interest in a Competitive Business, regardless of its location. An exception exists for equity ownership of less than two percent (2%) in a publicly traded Competitive Business on a recognized United States stock exchange.
Additionally, franchisees are prohibited from performing services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, regardless of its location. They cannot divert or attempt to divert any actual or potential business or client of their Focalpoint Coaching franchise or any other Focalpoint Coaching franchise to a Competitive Business. Furthermore, franchisees are barred from engaging in any activity that, in Focalpoint Coaching's sole opinion, might harm the goodwill of the Focalpoint Coaching marks or the Franchise System.
The term "Competitive Business" is defined as any business that derives more than twenty percent (20%) of its revenue from selling business training or business consulting services, or from selling products similar to Focalpoint Coaching's proprietary products. It also includes any business that grants franchises or licenses to others to operate the type of business specified above, excluding other Focalpoint Coaching franchises operated under an agreement with Focalpoint Coaching.
These restrictions are in place to protect Focalpoint Coaching's interests in its confidential information, trademarks, and the goodwill and reputation of its franchise businesses. Franchisees should be aware of these limitations and ensure they do not engage in any activities that could be considered a violation of the covenant not to compete during the term of their Franchise Agreement. Franchisees must also secure similar non-compete agreements from specified personnel, including officers, directors, managers, associates, and other employees attending Focalpoint Coaching's training program or having access to confidential information.