During the term of the agreement, what activities are prohibited for Healthsource Chiropractic franchise owners, principal owners, or their immediate family members regarding competitive businesses?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
a. Non-Competition. You agree that we would be unable to protect the Confidential Information against unauthorized use or disclosure, and would be unable to encourage a free exchange of ideas and information among HealthSource Chiropractic franchises, if franchise owners of HealthSource Chiropractic franchises were permitted to hold interests in any competitive businesses (as described below). Therefore, during the Term of this Agreement, neither you, nor any Principal Owner, nor any member of your immediate family or of the
immediate family of any Principal Owner, shall directly or indirectly perform services for, or have any direct or indirect interest as an owner, investor, partner, director, officer, employee, manager, consultant, representative, or agent in, any business that offers products or services the same as or similar to those offered or sold at HealthSource Chiropractic Clinic franchises; provided, however, that the ownership of one percent (1%) or less of a publicly traded company will not be deemed to be prohibited by this Paragraph.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, during the term of the agreement, franchise owners, principal owners, and their immediate family members are restricted from engaging in competitive business activities. Specifically, they cannot directly or indirectly perform services for or have any ownership interest in businesses that offer products or services similar to those offered at HealthSource Chiropractic Clinic franchises. This includes roles as an owner, investor, partner, director, officer, employee, manager, consultant, representative, or agent.
This restriction is in place to protect HealthSource Chiropractic's confidential information and encourage the exchange of ideas among franchisees. The FDD specifies that owning one percent (1%) or less of a publicly traded company is an exception to this rule, meaning such a minor investment is permissible.
This non-competition agreement has significant implications for prospective franchisees and their families. It restricts their ability to participate in related business ventures during the term of the franchise agreement, which could impact their income streams or investment opportunities. Franchisees should carefully consider these limitations and ensure they understand the scope of what constitutes a 'competitive business' under the agreement.