Does the Red Wagon Club agreement prevent me from diverting customers from other Red Wagon Club Businesses to a Competitive Business?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, lessor, representative, or agent for a Competitive Business, wherever located or operating;
- (3) divert or attempt to divert any actual or potential business or Member of Franchisee's RWC Business to a Competitive Business;
- (4) engage in any other activity which might injure the goodwill of the Marks and System or would constitute an act of moral turpitude; or
- (5) solicit, interfere, or attempt to interfere with Franchisor's or its affiliates' relationships with any Members, vendors, or consultants.
A "Competitive Business" means (1) any membership-based business that is affiliated with a law firm that provides non-legal services to clients or members (including, but not limited to, training, social events, and seminars);
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, the franchise agreement addresses the diversion of business to a competitive business. Specifically, as a Red Wagon Club franchisee, you are prohibited from diverting or attempting to divert any actual or potential business or member of your Red Wagon Club business to a Competitive Business.
A "Competitive Business" is defined as any membership-based business that is affiliated with a law firm that provides non-legal services to clients or members, including training, social events, and seminars, or any businesses granting franchises or licenses to others to operate the type of businesses specified above.
This restriction is designed to protect the goodwill of the Red Wagon Club brand, system, and marks. The agreement also states that Red Wagon Club franchisees must obtain similar covenants from personnel specified by the franchisor, including any of the franchisee's employees having access to confidential information. The franchisor has the right to regulate the form of agreement that the franchisee uses and to be a third-party beneficiary of that agreement with independent enforcement rights.