What is considered a violation of the agreement that would prevent a Red Wagon Club franchise transfer?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) have any direct or indirect ownership (whether of record, beneficially, or otherwise) in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than three percent (3%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized 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
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
The 2024 Red Wagon Club Franchise Disclosure Document outlines several activities that would be considered a violation of the agreement and thus prevent a franchise transfer. These include having direct or indirect ownership in a competitive business, unless the equity ownership is less than 3% and the business is publicly traded on a recognized U.S. stock exchange.
Additionally, performing services for a competitive business as a director, officer, manager, employee, consultant, lessor, representative, or agent is prohibited. Franchisees are also barred from diverting or attempting to divert any actual or potential business or member of their Red Wagon Club business to a competitive business.
Engaging in any other activity that could harm the Red Wagon Club would also be a violation. These restrictions ensure that franchisees remain committed to the success of the Red Wagon Club system and do not use their position to benefit competing businesses.