After the Alloy franchise agreement expires, for how long is the franchisee restricted from engaging in a competing business?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- You covenant that you will not, for a period of two years after the expiration or termination of this Agreement, or after the expiration of any Interim Period, regardless of the cause of termination, or within two years of the sale of the Facility or any interest in you, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or entity, own, manage, operate, maintain, engage in, consult with or have any interest in a Competing Business:
- 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 us or our affiliates.
For purposes of this Section 10.D, a Competing Business includes any facility or business which includes offering personal training services in a one-on-one or group setting.
- You agree that the length of time in subpart (3) will be tolled for any period during which you are in breach of the covenants or any other period during which we seek to enforce this Agreement. The parties agree that each of the foregoing covenants will be construed as independent of any other covenant or provision of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees are subject to a non-compete covenant for a period of two years after the expiration or termination of the Franchise Agreement or any Interim Period. This restriction applies regardless of the cause of termination or within two years of the sale of the Alloy facility or any interest in the franchisee's business.
The non-compete clause prevents the franchisee from owning, managing, operating, maintaining, engaging in, consulting with, or having any interest in a Competing Business. This restriction is limited to specific locations: the premises of the former Alloy facility, within 15 miles of the former Alloy facility, or within 15 miles of any other business or facility using the Alloy system, whether franchised or owned by Alloy or its affiliates.
For the purposes of the non-compete agreement, a Competing Business is defined as any facility or business that offers personal training services in a one-on-one or group setting. The agreement also states that the length of the non-compete period will be extended for any time the franchisee is in breach of the covenants or during any period when Alloy seeks to enforce the agreement. This means that any legal disputes or violations of the agreement could prolong the period during which the franchisee is restricted from engaging in a competing business.
It is important to note that in California, such non-compete provisions may not be enforceable under California law, as stated in Item 17 of the FDD. This is a crucial consideration for prospective franchisees in California, as the enforceability of the non-compete agreement could be challenged in court.