Under what circumstances is a business NOT considered a 'Competitive Business' for a Goldfish Swim School franchisee?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
For the purposes of this Agreement, "Competitive Business" means any business that offers (or grants franchises or licenses to others to operate a business that offers) swim instruction to children the same as or similar to those provided by Goldfish Swim Schools or in which Trade Secrets or other Confidential Information could be used to the disadvantage of Company, any of its affiliates or its other franchisees; provided, however, that the term "Competitive Business" shall not apply to (a) any business operated by Franchisee under a Franchise Agreement with Company, or (b) any business operated by a publicly-held entity in which Franchisee owns less than a five percent (5%) legal or beneficial interest.
Source: Item 23 — RECEIPTS (FDD pages 77–389)
What This Means (2025 FDD)
According to the 2025 Goldfish Swim School FDD, a 'Competitive Business' is defined as one that offers swim instruction to children similar to that of Goldfish Swim School, or one that could use the company's trade secrets or confidential information to the disadvantage of Goldfish Swim School, its affiliates, or other franchisees. However, there are exceptions to this definition.
Specifically, a business is not considered a 'Competitive Business' if it is operated by the franchisee under a franchise agreement with Goldfish Swim School. This means a franchisee can operate multiple Goldfish Swim School locations without violating the non-compete clause. Additionally, a business operated by a publicly-held entity in which the franchisee owns less than 5% of the legal or beneficial interest is also not considered a 'Competitive Business'. This allows franchisees to invest in publicly traded companies that may have some competitive aspects, as long as their ownership stake remains below the 5% threshold.
These exceptions provide some flexibility for Goldfish Swim School franchisees. They can expand their involvement within the Goldfish Swim School system or make minor investments in other businesses without being restricted by the non-compete agreement. It is important for prospective franchisees to understand these definitions and exceptions to ensure they do not inadvertently violate the terms of their franchise agreement.