Does the Spray Net franchise agreement prohibit a franchisee from attempting to divert prospective customers to a Competing Business?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
A. During the Term of this Agreement. During the term of this Agreement, neither Franchisee, its principals, owners, guarantors or Designated Manager(s), nor any immediate family of Franchisee, its principals, owners, guarantors or Designated Manager(s), may, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation:
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- Own, maintain, engage in, be employed or serve as an officer, director, or principal of, lend money or extend credit to, lease/sublease space to, or have any interest in or involvement with, any other business that: (i) offers, provides or sells products or services in connection with (a) the painting (spray-painting or traditional),and/or coating of exterior covering of doors, windows, roofs, and sidings of immovable structures including homes and other buildings, and (b) any kind of the Approved Products, Approved Services, and the Ancillary Services (as these terms are defined in this Agreement and as may be modified by Franchisor from time to time) that are offered or provided by the Franchised Business and/or other Businesses (each, a "Competing Business"); or (ii) offers or grants licenses or franchises, or establishes joint ventures, for the ownership or operation of a Competing Business. For purposes of this Agreement, a Competing Business does not include: (y) any business operated by Franchisee under a Franchise Agreement with Franchisor; or (z) any business operated by a publicly-traded entity in which Franchisee owns less than two percent (2%) legal or beneficial interest;
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- Subject to and as permitted by applicable law, employ or seek to employ any person who is at that time employed by Franchisor, Franchisor's affiliates or any other System franchisee, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment thereat; or
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- Divert, or attempt to divert, any prospective customer to a Competing Business in any manner.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the franchise agreement explicitly prohibits franchisees from diverting or attempting to divert prospective customers to a Competing Business. This restriction is in place during the term of the agreement. A "Competing Business" is defined as any business that offers similar painting or coating services for exterior building surfaces, or that offers or grants licenses or franchises for the operation of such competing businesses.
This provision aims to protect the Spray Net brand and the integrity of its franchise system. By preventing franchisees from diverting potential customers to competing businesses, Spray Net ensures that franchisees remain focused on promoting and growing their own Spray Net franchise. This restriction helps maintain a consistent level of service and customer experience across all franchise locations.
For a prospective Spray Net franchisee, this means they cannot operate a separate business that competes with Spray Net, nor can they actively direct potential Spray Net customers to a competitor. Violation of this clause could lead to breach of contract and potential legal consequences. This is a fairly standard clause in franchise agreements, designed to protect the franchisor's brand and market share.