What noncompete covenants are outlined in Section 12 of the Body20 Franchise Agreement?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 12 Noncompete Covenants.
- 12.1 During Term. You acknowledge that you will receive valuable, specialized training and confidential information regarding the manufacturing, operational, sales, promotional, and marketing methods of us and the Brand. During the Term, you and your Owners must not, without our prior written consent, either directly or indirectly, for themselves, or through, on behalf of, or in conjunction with any other person or Entity:
- (a) own, manage, engage in, be employed by, advise, make loans to, lease or sublease space to, or have any other interest in any competitive business, as such term is defined in Schedule A (a "Competitive Business") at any location in the United States;
- (b) divert or attempt to divert any business or customer or potential business or customer of the Studio to any Competitive Business, by direct or indirect inducement or otherwise;
- (c) perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System; or
- (d) use any vendor relationship established through your association with us for any purpose other than to purchase products or equipment for use or retail sale in the Studio.
- 12.2 After Termination, Expiration, or Transfer. For two years after the expiration or termination of this Agreement or an approved Transfer to a new franchisee, you and your Owners will be subject to the same restrictions as in Section 12.1 (During Term), except the restrictions in Section 12.1(a) and 12.1(b) shall be geographically limited to any Competitive Business that is located within a 10-mile radius of your former Studio or any other Studio that is operating or under development at the time of such expiration, termination, or Transfer. With respect to the Owners, the time period in this Section 12.2 will run from the expiration, termination, or Transfer of this Agreement or from the termination of the Owner's relationship with you, whichever occurs first.
- 12.3 Publicly Traded Corporations. Ownership of less than five percent of the outstanding voting stock of any class of stock of a publicly traded corporation will not, by itself, violate this Section 12.
- 12.4 Covenants of Owners and Employees. The Owners personally bind themselves to this Section 12 by signing this Agreement or the attached Guarantee. We may, in our sole discretion, require you to obtain from your officers, directors, Designated Managers, Owners' spouses, and other individuals that we may designate executed agreements containing nondisclosure and noncompete covenants similar in substance to those contained in this Section 12 as we prescribe in the Manuals and otherwise. The agreements must be in a form acceptable to us and specifically identify us as having the independent right to enforce them.
- 12.5 Enforcement of Covenants. You acknowledge and agree that (i) the time, territory, and scope of the covenants provided in this Section 12 are reasonable and necessary for the protection of our legitimate business interests; (ii) you have received sufficient and valid consideration in exchange for those covenants; (iii) enforcement of the same would not impose undue hardship; and (iv) the period of protection provided by these covenants will not be reduced by any period of time during which you are in violation of the provisions of those covenants or any period of time required for enforcement of those covenants. To the extent that this Section 12 is judicially determined to be unenforceable by virtue of its scope or in terms of area or length of time but may be made enforceable by reductions of any or all thereof, the same will be enforced to the fullest extent permissible. You agree that the existence of any claim you may have against us, whether or not arising from this Agreement, will not constitute a defense to our enforcement of the covenants contained in this Section 12. You acknowledge that any breach or threatened breach of this Section 12 will cause us irreparable injury for which no adequate remedy at law is available, and you consent to the issuance of an injunction prohibiting any conduct violating the terms of this Section 12. Such injunctive relief will be in addition to any other remedies that we may have.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, Section 12 outlines the noncompete covenants for franchisees and their owners, addressing conduct both during the term of the agreement and after its termination, expiration, or transfer.
During the franchise term, franchisees and their owners are prohibited from engaging in any competitive business within the United States without Body20's prior written consent. This includes owning, managing, being employed by, advising, making loans to, or leasing space to a competitive business. Franchisees are also barred from diverting or attempting to divert any business or customers to a competitive business, performing any act injurious to the goodwill associated with the Body20 brand, or using vendor relationships established through Body20 for unauthorized purposes.
Post-termination, the noncompete restrictions continue for two years after the agreement expires, terminates, or is transferred. During this period, the restrictions mirror those in place during the term, but the geographic scope is limited to a 10-mile radius of the former Body20 studio or any other Body20 studio operating or under development at the time of termination, expiration, or transfer. The FDD also specifies that ownership of less than five percent of the outstanding voting stock of a publicly traded corporation does not violate these noncompete terms.
The owners of the Body20 franchise must personally agree to these noncompete obligations by signing the Franchise Agreement or an attached guarantee. Body20 retains the right to require similar noncompete agreements from officers, directors, designated managers, owners' spouses, and other designated individuals. The franchisee acknowledges that the time, territory, and scope of these covenants are reasonable and necessary to protect Body20's business interests, and that breaches of these covenants would cause irreparable injury to Body20, entitling them to injunctive relief in addition to other remedies.