Who is subject to the non-competition covenant 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).
Source: Item 23 — RECEIPTS (FDD pages 47–142)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, the non-competition covenant applies to the Licensee, its affiliates, any owner, and any member of the immediate family of the Licensee or any owner. This restriction is in effect for 24 months following the expiration or termination of the agreement.
Specifically, these parties are prohibited from having any 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 those closely associated with the Red Wagon Club franchise from leveraging their knowledge and experience gained during the franchise term to directly compete with Red Wagon Club after the agreement ends. This is a fairly standard practice in franchising to protect the brand and its established market presence.