Is a franchisee required to comply with all covenants contained in the Basecamp Fitness franchise agreement after termination?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. You will immediately cease to operate the business franchised under this Agreement, and will not thereafter, directly or indirectly, represent to the public or hold yourself out as a Basecamp Fitness franchisee with respect to such business.
- B. You will immediately and permanently cease to use, in any manner whatsoever, all confidential information, approved Information System and related software, methods, procedures and techniques used by or associated with the System, and the Marks and distinctive forms, slogans, signs, symbols, logos and devices associated with the System, as well as any name, mark, symbol, logo or slogan similar to any of the Marks. You will also specifically authorize us to physically remove any signage bearing any of the Marks that you may fail to remove. Further, if we elect to remove such signage, you will, upon demand, reimburse us for any costs we incur in doing so.
- C. You will immediately return to us the Manual, all copies or excerpts thereof, and any property held or used by you that is owned by us and will cease to use, and either destroy or convey to us, all signs, advertising materials, displays, stationery, forms and any other materials that bear or display the Marks.
- D. Subject to Section 16.H below, you will take such actions as may be necessary to cancel any assumed name or similar registration that contains the Marks "Basecamp" or "Basecamp Fitness" or any other Mark, and will immediately and permanently refrain from and cease all use of the Marks on or in any Technology Platforms and cancel any Technology Platform you control as we direct. You agree and acknowledge that your continued use of the Marks after the expiration or termination of this Agreement will be without our consent and will constitute an "exceptional case" under federal trademark law (15 U.S.C. § 1117) entitling us to recover treble damages, costs and attorneys' fees.
- E. You will, within ten (10) days after termination or expiration of this Agreement, make such modifications and alterations to your Basecamp Studio premises as may be necessary to distinguish the appearance of the premises from all attributes of the System and will make such specific additional changes thereto as we may request. You agree that, at a minimum, such modifications will include: (i) removal of all signage; (ii) alteration of the color scheme and decor; and (iii) discontinuation of the use of any item containing any of the Marks.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Basecamp Fitness Franchise Disclosure Document, the franchisee's obligations after termination depend on the specific covenant and the state in which the franchise operates. Generally, franchisees must cease operations, stop representing themselves as a Basecamp Fitness franchisee, and discontinue using confidential information, the Basecamp Fitness system, and trademarks. They must also return the operations manual and any company property.
Specifically, franchisees are required to remove signage bearing Basecamp Fitness marks, and if they fail to do so, Basecamp Fitness can remove it and charge the franchisee for the costs. Franchisees must also modify their studio premises to differentiate them from the Basecamp Fitness system, including removing signage, altering the color scheme, and discontinuing the use of items containing Basecamp Fitness marks. The FDD also states that continued use of the marks after termination could result in treble damages, costs, and attorneys' fees.
However, certain covenants, such as non-compete agreements, may not be enforceable in some states like North Dakota and California. In California, the franchise agreement contains a covenant not to compete which extends beyond the termination of the franchise, but this provision may not be enforceable under California law. Therefore, while Basecamp Fitness franchisees generally have post-termination obligations, the enforceability of specific covenants can vary by jurisdiction.