factual

Are Red Wagon Club licensees required to prevent their affiliates from disparaging the franchisor?

Q: Are Red Wagon Club licensees required to prevent their affiliates from disparaging the franchisor?

- (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)

Red_Wagon_Club Franchise · 2024 FDD

Answer 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 FDD, licensees are required to prevent their affiliates from disparaging the franchisor. Specifically, during and after the term of the agreement, the licensee must ensure that their current and former owners, officers, directors, employees, representatives, affiliates, successors, and assigns do not speak or write negatively about Red Wagon Club, its franchisees, licensees, the brand, or their respective personnel. This obligation extends to preventing any actions that could defame, ridicule, or injure the goodwill of these parties.

This requirement is a standard practice in franchising, designed to protect the brand's reputation and maintain positive relationships within the franchise network. By including affiliates and related parties, Red Wagon Club aims to create a comprehensive shield against negative publicity that could arise from those associated with the licensee.

For a prospective Red Wagon Club licensee, this means taking proactive steps to ensure that all individuals and entities connected to their business are aware of and adhere to the non-disparagement clause. This could involve implementing internal policies, providing training, and clearly communicating the importance of maintaining a positive image of the Red Wagon Club brand. Failure to comply with this provision could result in legal repercussions and damage the relationship between the licensee and Red Wagon Club.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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