What post-term obligations regarding non-compete apply to an Alloy franchisee after termination or expiration of the Franchise Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that you will receive valuable training, Confidential Information and goodwill that you otherwise would not receive or have access to but for the rights licensed to you under this Agreement. You therefore agree to the following noncompetition covenants:
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- Unless otherwise specified, the term "you" as used in this subparagraph 10.D includes, collectively and individually, all Owners, guarantors, officers, directors, members, managers, partners, as the case may be, and holders of any ownership interest in you and any immediate family members of same including spouses and children. We may require you to obtain from your manager and other individuals identified in the preceding sentence a signed non-compete agreement in a form satisfactory to us that contains the noncompete provisions of this subparagraph 10.D.
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- You covenant that during the term of this Agreement or during any Interim Period you will not, 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 any Competitive Business.
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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 certain non-compete obligations after the termination or expiration of their Franchise Agreement. These obligations are designed to protect Alloy's valuable training, confidential information, and goodwill. The term "you" in this context includes owners, guarantors, officers, directors, members, managers, partners, and holders of any ownership interest, as well as their immediate family members. Alloy may also require managers and other individuals to sign a non-compete agreement.
Specifically, for a period of two years after the expiration or termination of the Franchise Agreement (or after the expiration of any Interim Period) or within two years of the sale of the Facility or any interest in the franchisee, the franchisee is restricted from engaging in any Competing Business. This includes owning, managing, operating, maintaining, engaging in, consulting with, or having any interest in a Competing Business. 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 restrictions apply in the following locations: at 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. The duration of the non-compete period may be extended (tolled) for any period during which the franchisee is in breach of the non-compete covenants or any other provision of the Franchise Agreement, or during any period in which Alloy seeks to enforce the agreement. In California, the FDD notes that the non-compete provision extending beyond the termination of the franchise may not be enforceable under California law.
These post-term non-compete obligations are fairly standard in the franchise industry, as franchisors seek to protect their brand and business model. Prospective Alloy franchisees should carefully consider the scope and duration of these restrictions, as they could limit their ability to work in the fitness industry after leaving the Alloy system. Franchisees should also be aware of the potential for the non-compete period to be extended if they breach the agreement. It is advisable to seek legal counsel to fully understand the implications of these non-compete covenants in their specific state.