Does Red Wagon Club reserve rights not expressly granted to the franchisee in the Franchise Agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
We reserve for ourselves and our affiliates all rights that are not expressly granted to you in the Franchise Agreement and the right to do all things that we do not expressly agree in the Franchise Agreement not to do, in each case, without compensation to you, without regard to proximity to your RWC Business, and on such terms and conditions as we deem appropriate. For example, we and our affiliates, ourselves or through authorized third parties, may (and you are not permitted to) do the following:
- (1) own and operate, and license others to own and operate, RWC Businesses using the System and the Marks on such terms and conditions we deem appropriate outside of your Protected Territory, as applicable;
- (2) while we and our affiliates do not currently do so, and have no current plans to do so, we and our affiliates may develop or become associated with other businesses, including other membership-based concepts and systems that offer the same or similar services, and/or award franchises under such other concepts, provided that, if located in your Protected Territory, as applicable, such businesses are not identified by the Marks (although they may, in our discretion, use and incorporate certain other elements of System and System Standards);
- (3) acquire or be acquired by, merge or affiliate with, or engage in any transaction with other businesses (whether or not competitive) located anywhere and (i) convert the other businesses to RWC Businesses, (ii) allow the other businesses to operate as part of or to use the elements of the System, and/or (iii) permit the other businesses to continue to operate under another name;
- (4) solicit members and customers, advertise, and authorize others to advertise, and promote sales of RWC Businesses anywhere, including within the Protected Territory, and enter into Membership Agreements; and
- (5) market and sell, and grant to others the right to market and sell, anywhere (inside and outside your Protected Territory) through alternative channels of distribution (for example, through the Internet, catalog sales, telemarketing, direct marketing, e-commerce, and product lines in other businesses), any product or service identified by the Marks or any other trademarks, whether or not authorized for sale at RWC Businesses and whether similar to or different than products or services authorized for sale at RWC Businesses.
Source: Item 12 — TERRITORY (FDD pages 32–33)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, Red Wagon Club reserves all rights not explicitly granted to the franchisee in the Franchise Agreement. This means Red Wagon Club retains the authority to act in ways not specifically prohibited by the agreement, without providing compensation to the franchisee and without regard to the proximity of the franchisee's Red Wagon Club Business. These rights can be exercised under terms and conditions that Red Wagon Club deems appropriate.
Specifically, Red Wagon Club and its affiliates can own and operate, or license others to operate, Red Wagon Club Businesses outside of a franchisee's Protected Territory. They can also develop or become associated with other businesses, including membership-based concepts offering similar services, and award franchises under these other concepts, even within a franchisee's Protected Territory, as long as these businesses are not identified by the Red Wagon Club's Marks. Red Wagon Club can also acquire, merge, or affiliate with other businesses, regardless of whether they are competitive, and convert them to Red Wagon Club Businesses, allow them to operate as part of the Red Wagon Club System, or permit them to continue operating under another name.
Furthermore, Red Wagon Club reserves the right to solicit members and customers, advertise, and authorize others to advertise and promote sales of Red Wagon Club Businesses anywhere, including within a franchisee's Protected Territory. They can also market and sell, and grant others the right to market and sell, through alternative channels of distribution such as the Internet, catalog sales, telemarketing, direct marketing, e-commerce, and product lines in other businesses, any product or service identified by the Marks or other trademarks, whether or not authorized for sale at Red Wagon Club Businesses. This reservation of rights gives Red Wagon Club considerable latitude in its business operations and strategic decisions, which could potentially impact a franchisee's business.