What is Spray Net's obligation regarding establishing or licensing other businesses using the System and Proprietary Marks within a franchisee's designated territory?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
signated Territory upon Franchisor's request, Franchisor shall reimburse Franchisee for all actual costs related to providing such Approved Services and/or Ancillary Services upon receiving receipts for such costs from Franchisee.
-
- For so long as Franchisee is in compliance with this Agreement, Franchisor will not establish or operate, or license a third party the right to establish or operate, any other Business that utilizes the System and Proprietary Marks from a premises within the Designated Territory.
-
- Notwithstanding the foregoing, regardless of whether Franchisee offers or declines to offer Ancillary Services, (1) Franchisor or an affiliate of Franchisor may offer and/or provide such Ancillary Services within the Designated Territory, (2) Franchisor may authorize another Spray-Net franchisee to offer and/or provide such Ancillary Services within the Designated Territory, or (3) Franchisor may offer and sell franchise rights to a third party under the Spray-Net brand or otherwise to offer and/or provide such Ancillary Service
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Spray Net is restricted from establishing, operating, or licensing a third party to operate another business utilizing the Spray Net system and proprietary marks from a location within the franchisee's designated territory, provided the franchisee remains in compliance with the franchise agreement. However, this obligation has some exceptions regarding ancillary services.
Specifically, Spray Net, or an affiliate, retains the right to offer and provide ancillary services within the franchisee's designated territory. Spray Net can also authorize another Spray-Net franchisee or a third party to offer these ancillary services within the same territory. The FDD specifies that the franchisee will not receive any remuneration if Spray Net exercises these rights regarding ancillary services.
This means that while Spray Net grants a territory, the protection is limited to the core Spray Net business. Spray Net retains considerable freedom to introduce competing services, either directly or through others, within the franchisee's territory, particularly concerning ancillary services. A prospective franchisee should carefully consider the potential impact of these exceptions on their business.