What are the Noncompetition Restrictions for Bft, and what happens if they are violated?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
-238-2">5. NO LICENSE TO THE MARKS
Notwithstanding any provision to the contrary under this Agreement, this Agreement does not grant Developer (or any of its affiliates) any right to use the Marks. The right to use the Marks is granted only under Franchise Agreements. Developer (and its affiliates) may not use any Mark as part of any corporate or trade name or as its (or their) primary business name or with any prefix, suffix or other modifying words, terms, designs, symbols or in any modified forms.
6. COVENANTS REGARDING COMPETITIVE ACTIVITIES
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.
B. Enforcement of Covenants. Developer agrees that: (a) the restrictions contained and described in this Article 6 are reasonable and necessary to protect the legitimate interests of the System and Franchisor, (b) the existence of any claims it may have against Franchisor, whether or not arising out of this Agreement, shall not constitute a defense to the enforcement of the covenants in this Article 6, and (c) Developer's or any Restricted Party's violation of the terms of this Article 6 will cause irreparable injury to Franchisor for which no adequate remedy at law is available and that Franchisor shall be entitled, without bond (which requirement is hereby waived), to preliminary and permanent injunctive relief and damages, as well as an equitable accounting of all earnings, profits, and other benefits arising from such violation, which remedies shall be cumulative and in addition to any other rights or remedies to which Franchisor shall be entitled. Developer shall pay all costs and expenses, including, without limitation, reasonable attorneys' fees, incurred by Franchisor in connection with the enforcement of this Article 6. If Developer or a Restricted Party violates any post-term or post-transfer restriction described in this Article 6, the restrictions contained herein shall remain in effect until two (2) years after Developer or such Restricted Party begins to comply with those restrictions. If Developer contests the enforcement of this Article 6 and enforcement is delayed pending litigation, and if Franchisor prevails, the period of non-competition shall be extended for an additional period equal to the period of time that enforcement of this Article 6 is delayed. Courts are authorized and directed to reduce the scope or duration (or both) of the provision(s) in issue solely to the extent necessary to render it enforceable and/or reasonable and to enforce the provision so revised.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, franchisees and their owners are subject to noncompetition restrictions that limit their involvement with businesses deemed competitive with Bft. These restrictions are detailed within each Franchise Agreement executed under the Multi-Unit Agreement and are considered fully adopted within the agreement.
Specifically, for two years following the termination or expiration of the agreement, or after a franchisee or owner transfers their interest, they are prohibited from owning, maintaining, engaging in, or being involved with any Competing Business. This restriction applies within the Development Area, within 10 miles outside of it, or within a 10-mile radius of any open or developing Bft studio.
Bft states that these restrictions are reasonable and necessary to protect its legitimate business interests. Violating these terms will cause irreparable injury to Bft, entitling them to injunctive relief, damages, and an accounting of profits gained from the violation. Bft is entitled to preliminary and permanent injunctive relief and damages, as well as an equitable accounting of all earnings, profits, and other benefits arising from such violation, which remedies shall be cumulative and in addition to any other rights or remedies to which Franchisor shall be entitled. The franchisee is responsible for all costs and expenses, including attorney's fees, incurred by Bft in enforcing these restrictions. If a franchisee contests enforcement and litigation delays it, the non-competition period extends by the length of the delay. Courts may reduce the scope or duration of the restrictions to make them enforceable. Bft retains the discretion to reduce the scope of any non-compete covenant.
Furthermore, failure to comply with the noncompetition restrictions constitutes grounds for termination of the agreement. This means Bft can terminate the agreement if a Restricted Party fails to comply with the Noncompetition Restrictions. This could lead to the loss of the franchise and the right to operate under the Bft brand.