Does the restriction on competitive businesses in the Mr. Sandless agreement apply to the franchisee's principals?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Agreement, neither you, your principals, nor any member of the immediate family of you or your principals may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation:
18.1.1 Own, maintain, engage in, be employed by, lend money to, extend credit to or have any interest in any other business offering wood floor refinishing, including sanding, dustless refinishing, screening and recoats, sandless refinishing, wood polishing, wood floor care, wood floor cleaning, floor maintenance, floor care, floor refinishing, and floor cleaning for tile, VCT, terrazzo, marmoleum, linoleum, vinyl, asphalt, rubber, laminates, concrete, slate, brick, stone, granite, grout sealing and coloring, ceramic floors, and cabinet refinishing, and exterior wood refinishing or any other services and/or products similar to those offered under the System (a "Competitive Business"); provided, however, that this Section does not apply to your operation of any other Mr. Sandless Business pursuant to a valid franchise agreement with us or your ownership of less than five percent (5%) of any publicly held company;
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, the restrictions on competitive businesses apply to the franchisee, their principals, and members of their immediate family. During the term of the Franchise Agreement, these parties are prohibited from owning, maintaining, engaging in, or having any interest in a business that offers wood floor refinishing or similar services, including services for tile, concrete, and cabinet refinishing. This restriction extends to employment by or lending money to a competitive business.
This non-compete clause prevents franchisees and related parties from directly competing with Mr. Sandless during the agreement term. However, there are exceptions: franchisees can operate other Mr. Sandless businesses under a valid franchise agreement, and they can own less than 5% of a publicly held company involved in similar services.
After the termination of the agreement, a separate set of restrictions apply, as outlined in Paragraph 7 of the Franchise Agreement. The guarantor also agrees to be bound by the terms of the agreement, including the non-competition provisions in Section 18. This ensures that individuals with a vested interest in the Mr. Sandless franchise are also committed to upholding the non-compete obligations.
Prospective franchisees should carefully review Section 18 and Paragraph 7 of the Franchise Agreement, along with the Guaranty Agreement, to fully understand the scope and duration of these non-compete restrictions. It is important to consider how these limitations might affect future business opportunities for the franchisee, their principals, and their immediate family members.