In California, is the covenant not to compete that extends beyond termination of the franchise in the Body20 Development Agreement and Franchise Agreement necessarily enforceable?

According to Body20's 2025 Franchise Disclosure Document, the enforceability of the covenant not to compete that extends beyond the termination of the franchise within the Development Agreement and Franchise Agreement is uncertain under California law. Specifically, Item 23 of the FDD states that such provisions 'might not be enforceable under California law.'

This statement serves as a warning to potential Body20 franchisees in California. California law is generally less receptive to non-compete agreements, especially those extending beyond the term of the franchise. This means that if a franchisee were to leave the Body20 system, the franchisor's ability to prevent them from opening a competing business nearby might be limited.

Prospective franchisees should seek legal counsel to fully understand the implications of this clause in California. They should consider the potential risks and benefits associated with this uncertainty, especially if they foresee a possibility of leaving the Body20 franchise system in the future. Understanding the specific limitations and potential challenges to enforcing the non-compete agreement is crucial for making an informed investment decision.