Is a My Salon Suite franchisee allowed to divert business or customers to a competitor?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
To protect the goodwill and unique qualities of the My Salon Suite franchise system and the confidentiality and value of the Confidential Information, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor covenants that, during the time Covenantor is associated with Franchisee, Covenantor will not:
- (i) Divert, or attempt to divert, any business or customer of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with SMF's proprietary trademarks and operating system.
- (ii) Own, maintain, engage in, lend money to, extend credit to, have any interest in, or be employed as an officer, director, executive, or principal of any other business that: (i) is the same as, or substantially similar to the Franchised Business; (ii) engages in the rental of salon studio spaces or that offers or provides any of the other products/services that are offered by the Franchised Business; or (iii) grants or has granted franchises or licenses, or establishes or has established joint ventures, for one or more businesses that engage in the rental of salon studio spaces or that offer or provide any of the other products/services that are offered by the Franchised Business (collectively, a "Competing Business"); provided, however, that this Section does not apply to Franchisee's operation of a Franchised Business pursuant to a valid franchise agreement with SMF.
Source: Item 23 — RECEIPTS (FDD pages 95–230)
What This Means (2025 FDD)
According to the 2025 My Salon Suite Franchise Disclosure Document, a franchisee is prohibited from diverting business or customers to a competitor during the time they are associated with the franchise. This restriction is in place to protect the goodwill and unique qualities of the My Salon Suite franchise system, as well as the confidentiality and value of its confidential information.
Specifically, the franchisee (or Covenantor, as referenced in the document) cannot divert or attempt to divert any business or customer of the franchised business to any competitor through direct or indirect means. They are also prohibited from performing any act that could be injurious or prejudicial to the goodwill associated with SMF's (Suite Management Franchising, LLC) proprietary trademarks and operating system. This includes owning, maintaining, engaging in, lending money to, extending credit to, having any interest in, or being employed by a competing business.
These restrictions apply while the franchisee is associated with My Salon Suite. The definition of "Confidential Information" includes non-public information about SMF's operating system, the My Salon Suite businesses, the manual, proprietary training, marketing materials, trade secrets, methodologies, financial information, vendor prices, and client lists. The franchisee's access to this information is considered valuable consideration for the non-compete covenants.
The FDD also specifies post-term covenants not to compete, which extend beyond the term of the franchise agreement. These covenants further restrict the franchisee's involvement with competing businesses for a period of two years after the termination, transfer, or expiration of the franchise agreement, reinforcing My Salon Suite's efforts to protect its market position and confidential information.