Following termination or expiration of the Aira Fitness franchise agreement, what post-term non-compete obligations must a franchisee comply with?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.2 Developer specifically acknowledges that, pursuant to this Agreement, Developer will have access to the Confidential Information. Accordingly, Developer covenants that Developer and its Owners shall not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, or entity:
- (a) own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any Competitive Business or any entity which is franchises, licenses or develops Competitive Businesses within the Development Area, or within a ten (10) mile radius of any existing Aira Fitness Center, except under a validly existing Franchise Agreement with Franchisor. You acknowledge and agree that, after the date of this Agreement, other Aira Fitness Centers may open, thereby expanding the geographical area in which you will not be able to compete with us. For purposes of this Section 9, a "Competitive Business" is defined as any fitness center, studio or exercise facility;
- (b) directly or indirectly divert or attempt to divert any former business or customer of a Aira Fitness Center to any competitive business; and
- (c) employ or seek to employ any person employed by us or our affiliate or by any other Aira Fitness Center franchisee, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment;
The ownership of two percent (2%) or less of a publicly traded Franchisor will not be deemed to be prohibited by this paragraph.
- 9.3 Court Modification of Agreement**.** You agree that this form of Agreement is prepared for use in many jurisdictions with differing public policies and that such public policies change. Accordingly, you agree that the prevailing non-competition restrictions set forth above may be modified by a Court to the extent necessary to make the non-competition agreements valid and enforceable against you.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, after the expiration or termination of the franchise agreement, the franchisee, referred to as "Developer," along with their Owners, must adhere to specific non-compete obligations for two years, regardless of the reason for termination. These obligations prevent them from engaging in or having any interest in a Competitive Business within the Development Area or within a 10-mile radius of any existing Aira Fitness Center, unless they operate under a valid Aira Fitness Franchise Agreement. A "Competitive Business" is defined as any fitness center, studio, or exercise facility. The agreement specifies that as new Aira Fitness Centers open, the geographical area where competition is restricted may expand.
Furthermore, the franchisee is prohibited from diverting or attempting to divert any former business or customer of an Aira Fitness Center to a competitive business. They are also barred from employing or attempting to employ anyone working for Aira Fitness, its affiliates, or any other Aira Fitness franchisee. The agreement also prevents them from inducing or attempting to induce such individuals to leave their employment.
However, the ownership of two percent or less of a publicly traded franchisor's stock is not considered a violation of these non-compete terms. The document also states that the non-competition restrictions may be modified by a court to ensure they are valid and enforceable. This acknowledges the varying public policies across different jurisdictions and the need for flexibility in enforcing the agreement. Aira Fitness emphasizes the importance of these covenants, stating that violations could result in irreparable injury, entitling them to injunctive relief and other remedies.