What does the Red Wagon Club agreement prohibit regarding disparagement during and after the term?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
- (b) Non-Disparagement.
During and after the Term, Licensee agrees not to, and to cause Licensee's current and former owners, officers, directors, employees, representatives, affiliates, successors, assigns not to disparage or otherwise speak or write negatively, directly or indirectly, of Franchisee, Franchisor, the Brand, Franchisor's franchisees and licensees, and each of the foregoing entity's owners, directors, managers, officers, employees, or representatives, or take any other action which would, directly or indirectly, subject any of the foregoing to defame, ridicule, scandal, reproach, scorn, or indignity, or which would negatively impact or injure the goodwill of the foregoing.
Source: Item 23 — RECEIPTS (FDD pages 47–142)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, the agreement includes a non-disparagement clause that extends both during the term of the agreement and after its expiration or termination. This clause prevents the licensee, as well as their current and former owners, officers, directors, employees, representatives, affiliates, successors, and assigns, from making negative statements about several parties.
The prohibition covers direct or indirect disparagement, speaking or writing negatively about the franchisee, Red Wagon Club itself, the brand, other Red Wagon Club franchisees and licensees, and the owners, directors, managers, officers, employees, or representatives of these entities. The clause aims to prevent any action that could defame, ridicule, scandalize, reproach, scorn, or cause indignity to these parties.
Furthermore, the non-disparagement clause seeks to protect the goodwill associated with the aforementioned parties. This means licensees must ensure that their actions and statements do not negatively impact or harm the reputation and positive image of the Red Wagon Club brand and its related entities, even after the agreement has ended. This is a fairly standard clause in franchise agreements, intended to protect the brand's reputation and prevent former franchisees from damaging the system.