factual

If the Alloy franchise agreement is terminated, does the non-compete covenant still apply?

Alloy Franchise · 2025 FDD

Answer from 2025 FDD Document

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 any Competitive Business.

    1. 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.

  1. 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.

TRANSFER OF FRANCHISE

Source: Item 23 — RECEIPTS (FDD pages 69–245)

What This Means (2025 FDD)

According to Alloy's 2025 Franchise Disclosure Document, the non-compete covenant remains in effect for a period of two years after the termination or expiration of the Franchise Agreement. This applies regardless of the reason for termination or after the expiration of any Interim Period, or within two years of the sale of the Facility or any interest in you.

The restrictions specify that the franchisee cannot directly or indirectly own, manage, operate, maintain, engage in, consult with, or have any interest in a Competing Business. This restriction applies to the premises of the former Alloy facility, within 15 miles of the facility, or within 15 miles of any other business or facility using the Alloy system, whether franchised or owned by Alloy or its affiliates.

A "Competing Business" is defined as any facility or business that offers personal training services in a one-on-one or group setting. The non-compete period can be extended if the franchisee breaches the covenants, or if Alloy seeks to enforce the agreement. However, for franchisees in California, this provision may not be enforceable under California law.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.