Is Red Wagon Club allowed to develop other social or membership-based clubs?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
3.C. RIGHTS FRANCHISOR RESERVES.
Franchisor retains all rights to conduct and authorize anyone else to conduct any business activities of any kind whatsoever and do anything other than what Franchisor has specifically and expressly agreed in Section 3.B to refrain from doing, at all times before, during and after the Term, without limitation and without compensation to Franchisee, regardless of the nature or location of such activities or their customers, and including any business offering or s
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, Red Wagon Club retains the right to conduct any business activities, including those that might compete with a franchisee's business. Specifically, Red Wagon Club reserves all rights to conduct and authorize any business activities of any kind whatsoever.
This means that Red Wagon Club is not restricted from developing other social or membership-based clubs, even if those clubs operate in the same area as a franchisee's Red Wagon Club business. The only limitation is that Red Wagon Club must not do anything that it has specifically and expressly agreed not to do in Section 3.B of the franchise agreement.
For a prospective franchisee, this clause represents a potential risk. Red Wagon Club could, in theory, open a competing social club nearby, or authorize a third party to do so, which could draw members away from the franchisee's location. It is important for a potential franchisee to fully understand the implications of this clause and to discuss it with Red Wagon Club before signing the franchise agreement.