Does the Bft non-compete apply if an owner of the Developer assigns their interest in the Development Agreement?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Noncompetition Restrictions. Developer acknowledges that, under each Franchise Agreement executed pursuant to this Agreement, the Restricted Parties (as defined in the Franchise Agreements) are subject to certain restrictions and covenants regarding activities which are deemed competitive with those of Franchisor, including restrictions regarding Competing Businesses, as that term is defined in the Franchise Agreement (the "Noncompetition Restrictions"). Developer acknowledges and agrees that it and its owners are subject to, and will comply with, all of the Noncompetition Restrictions described in the Franchise Agreements, each of which is adopted herein as though copied in its entirety. Developer further agrees that, in addition to any obligations with respect to Noncompetition Restrictions under the Franchise Agreements, for two (2) years after the expiration or sooner termination of this Agreement, or if applicable, after Developer or an owner of Developer has assigned its interest in this Agreement or in Developer (as applicable), the Restricted Parties or the transferring owner (as applicable) shall not own, maintain, engage in, be employed as an officer, director, or principal of, lend money to, extend credit to, lease/sublease space to, provide services to, or have any interest in or involvement with, any other Competing Business: (a) within the Development Area; (b) within 10 miles outside the boundaries of the Development Area, or (c) within a 10-mile radius of any Studio that is open, under lease or otherwise under development as of the date this Agreement expires or is terminated or, if applicable, as to a transferring owner, the date of such transfer.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, the non-competition restrictions apply if a Developer or an owner of the Developer assigns their interest in the Development Agreement. Specifically, for two years after the expiration or termination of the Development Agreement, or after a Developer or owner assigns their interest, the Restricted Parties or the transferring owner cannot be involved with any Competing Business.
This restriction includes owning, maintaining, or being employed by a Competing Business. It also extends to lending money, extending credit, leasing space, providing services, or having any interest in a Competing Business. The geographic scope of this restriction includes the Development Area, 10 miles outside the Development Area, and within a 10-mile radius of any open or developing Bft studio.
This non-compete obligation is significant for potential Bft developers and their owners. If they decide to transfer their interest in the Development Agreement, they are still bound by the non-compete restrictions for two years. This could limit their future business opportunities within the fitness industry, particularly in the areas where Bft operates. It is important for prospective developers to carefully consider these restrictions before entering into a Development Agreement and before making any decisions to assign their interest.