Is a Red Wagon Club franchisee allowed to be an employee of a Competitive Business?

• (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 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); or (2) any businesses granting franchises or licenses to others to operate the type of businesses specified in subparagraph (1).

Franchisee agrees to obtain similar covenants from the personnel Franchisor specifies, including any of Franchisee's employees having access to Confidential Information. Franchisor has the right to regulate the form of agreement that Franchisee uses and to be a third-party beneficiary of that agreement with independent enforcement rights.

Source: Item 22 — CONTRACTS (FDD page 47)