What constitutes a 'Competitive Business' according to the Alloy franchise agreement?

According to Alloy's 2025 Franchise Disclosure Document, a "Competing Business" is defined within the context of non-compete covenants that apply both during the term of the Franchise Agreement and for a period after its expiration or termination. Specifically, a Competing Business includes any facility or business that offers personal training services in either a one-on-one or group setting. This definition is crucial for franchisees to understand, as it dictates what types of business activities they are restricted from engaging in, both during their franchise term and for a specified period afterward.

The non-compete covenants apply not only to the franchisee but also to their Owners, guarantors, officers, directors, members, managers, partners, and holders of any ownership interest in the franchise, as well as their immediate family members, including spouses and children. Alloy may also require managers and other key individuals to sign a non-compete agreement. During the term of the agreement or any interim period, these individuals are prohibited from owning, managing, operating, maintaining, engaging in, consulting with, or having any interest in any Competitive Business, either directly or indirectly.

Post-termination, the franchisee and related parties are subject to similar restrictions for two years after the agreement expires or terminates, regardless of the cause of termination, or within two years of the sale of the Facility or any interest in the franchise. This restriction applies (a) at the premises of the former Facility; (b) within 15 miles of the Facility; or (c) within 15 miles of any other business or facility using the Alloy System, whether franchised or owned by Alloy or its affiliates. The length of this non-compete period can be extended if the franchisee breaches the covenants or if Alloy seeks to enforce the agreement. These covenants are construed as independent of any other covenant or provision of the Franchise Agreement.

This non-compete agreement ensures that franchisees do not leverage Alloy's training, confidential information, and goodwill to directly compete with Alloy, either during the franchise term or shortly thereafter. Prospective franchisees should carefully consider the scope and duration of these restrictions, as they could significantly impact their ability to engage in similar business ventures in the future. It is also important to note that Alloy retains all rights not expressly granted to the franchisee and can establish or license others to establish Alloy facilities at any location, regardless of proximity to the franchisee's Designated Area.