During the term of the Spray Net Franchise Agreement and Personal Guaranty, what activities are the undersigned prohibited from engaging in, either directly or indirectly?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
- During the Term of the Franchise Agreement and this Guaranty. During the term of the Franchise Agreement and this Personal Guaranty, each of the undersigned may not, directly or indirectly, for themselves or through, on behalf of, or in conjunction with any other person, partnership or corporation:
- 1.1. Own, maintain, engage in, be employed or serve as an officer, director, or principal of, lend money, lease space or extend credit to (or otherwise have any interest in or involvement with), any other business that offers, provides, manufactures, distributes, or sells any kind of products and services in connection with any 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 the Franchise 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"); and/or (ii) offers or grants licenses or franchises, or establishesjoint ventures, for the ownership or operation of a Competing Business; provided, however, that this Sectiondoes not apply to your operation of an SPRAY-NET franchise under a valid franchise agreement withFranchisor, or your ownership of less than two percent (2%) of the interests in a publicly traded company;
- 1.2. 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 Divert or attempt to divert business or customers of any Franchisee-owned Franchised Businesses to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to the 2025 Spray Net Franchise Disclosure Document, during the term of the Franchise Agreement and Personal Guaranty, the undersigned (which includes principals, owners, guarantors, and potentially their immediate family) are restricted from certain activities. Specifically, they cannot own, maintain, engage in, or be involved with any other business that competes with Spray Net. This includes businesses involved in painting or coating exterior surfaces, or those offering similar products and services to Spray Net, as well as businesses that offer or grant licenses or franchises for competing businesses. However, this restriction does not apply to the operation of another Spray Net franchise or ownership of less than 2% of a publicly traded company.
Additionally, franchisees are prohibited from employing or attempting to employ individuals currently working for Spray Net, its affiliates, or other Spray Net franchisees. They also cannot attempt to divert business or customers from any franchisee-owned Spray Net business to a competitor. Furthermore, they are barred from any action that could be detrimental to the goodwill associated with Spray Net's proprietary marks or the Spray Net system.
These restrictions are in place to protect Spray Net's market position, its franchisees, and the integrity of its brand. Franchisees should be aware of these limitations as they could impact other business ventures or employment opportunities during the term of their agreement. Understanding these in-term covenants against competition is crucial for anyone considering investing in a Spray Net franchise.