What is the duration of the non-competition period after the expiration or termination of the Red Wagon Club agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) Non-Competition. During the Term and for a period of 24 months after the expiration or termination of this Agreement, neither Licensee, its affiliates, nor any owner nor any member of the immediate family of Licensee or any owner, shall directly or indirectly:
- (i) have any interest as a disclosed or beneficial owner in any Competitive Business;
- (ii) perform services as a director, officer, manager, employee, consultant, lessor, representative, agent, or otherwise for any Competitive Business; or
- (iii) divert or attempt to divert any business or any customers of any Businesses to any Competitive Business.
- 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); or (2) any businesses granting
franchises or licenses to others to operate the type of businesses specified in subparagraph (1).
- (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.
- (c) Non-Interference.
During and for a period of 12 months after the Term, Licensee agrees not to, and to cause each of Licensee's current and former owners, officers, directors, principals, agents, partners, employees, representatives, affiliates, successors or assigns not to interfere or attempt to interfere with Franchisor's or its affiliates' relationship with any of its franchisees, licensees, lenders, vendors, consultants, or clients.
Source: Item 23 — RECEIPTS (FDD pages 47–142)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, a franchisee is subject to a non-competition covenant for 24 months after the expiration or termination of the franchise agreement. During this period, the franchisee, their affiliates, and their immediate family members are restricted from having any ownership interest in a Competitive Business, performing services for a Competitive Business, or diverting business or customers to a Competitive Business. A Competitive Business is defined as any membership-based business affiliated with a law firm that provides non-legal services or any business granting franchises or licenses to operate such businesses.
This non-compete clause prevents former Red Wagon Club franchisees from directly competing with the franchisor or other franchisees within the defined business scope. The restrictions apply not only to the franchisee but also to their affiliates and immediate family, indicating a broad scope intended to prevent any indirect competitive activities.
In addition to the non-competition agreement, the franchisee also agrees to a non-disparagement clause during and after the term of the agreement, and a non-interference clause for 12 months after the term. These clauses protect Red Wagon Club's brand reputation and relationships with its franchisees, licensees, vendors, consultants, and clients.