Does the Spray Net Franchise Agreement prohibit Spray Net from engaging in activities not expressly prohibited in the agreement?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
You expressly understand and agree that we and our affiliates shall have the right, in our sole discretion, to: (i) own and operate franchised businesses at any location(s) outside of the Designated Territory under the Proprietary Marks, or to license others the right to own and operate Spray-Net businesses at any location(s) outside of the Designated Territory under the Proprietary Marks and System; (ii) the right to own and operate businesses under different marks at any location(s) inside or outside of your Designated Territory, or license to others the right to own and operate such businesses, under different marks at any location(s) inside or outside of Designated Territory (such businesses will not primarily provide painting products and services); (iii) use the Proprietary Marks and System in connection with services and products, promotional and marketing efforts, or related items, or in alternative channels of distribution, including the sale of any products in wholesale and retail stores, via the Internet, and through mail order catalog, without regard to location; and (iv) use the Proprietary Marks and System, and license others to use the Marks and System to engage in any other activities not expressly prohibited in this Agreement.
Source: Item 12 — TERRITORY (FDD pages 49–52)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Spray Net retains the right to engage in activities not expressly prohibited by the Franchise Agreement. This means that unless the agreement specifically forbids an action, Spray Net is free to pursue it. This clause provides Spray Net with considerable flexibility to adapt its business strategies and operations as needed.
For a prospective franchisee, this reservation of rights has several implications. Spray Net can introduce new products, services, or alternative distribution channels without necessarily requiring franchisee participation or offering compensation. The FDD specifies that Spray Net has the right to own and operate franchised businesses outside the franchisee's designated territory, operate businesses under different brands (as long as they don't primarily offer painting services), and use the Spray Net Proprietary Marks and System in alternative channels of distribution like wholesale, retail, internet, and mail order catalogs.
This broad reservation of rights means that Spray Net franchisees may face competition from the franchisor itself or from other channels that Spray Net controls. While the agreement states that Spray Net will not establish another Spray Net business within the franchisee's designated territory, it does allow for alternative channels of distribution, including e-commerce, internet, and mail order. Franchisees should be aware that they do not have exclusive rights to all potential revenue streams within their territory.
Spray Net also reserves the right to develop and offer additional services ("Ancillary Services") within a franchisee's territory, either directly, through an affiliate, or through another franchisee. While a franchisee may have the opportunity to purchase the rights to offer these Ancillary Services, the Franchise Agreement does not grant any exclusivity or right of first refusal. This aspect of the agreement underscores the importance of understanding the competitive landscape and potential for internal competition when investing in a Spray Net franchise.