After termination of the Body20 agreement, what is the geographic restriction on operating a Competitive Business?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to the 2025 Body20 Franchise Disclosure Document, for two years after the expiration or termination of the Franchise Agreement, franchisees and their Owners are restricted from engaging in a Competitive Business within a 10-mile radius of their former Body20 studio or any other Body20 studio that is operating or under development at the time of termination. This restriction mirrors the limitations in place during the term of the agreement, focusing on preventing competition near existing or planned Body20 locations.
The definition of a "Competitive Business" includes any gymnasium, studio, athletic or fitness center, health club, exercise, aerobics facility, or similar fitness or exercise facility or business; any business that offers fitness training or products, services, or classes or training sessions that are similar to those offered by a Body20 studio; or any entity that grants franchises or licenses for any of the businesses. This broad definition aims to prevent former franchisees from leveraging their knowledge of the Body20 system to directly compete with the franchisor.
These non-compete terms apply not only to the franchisee but also to their Owners, with the restriction period for Owners commencing either at the termination of the Franchise Agreement or when the Owner's relationship with the franchisee ends, whichever occurs first. This ensures that individuals with significant influence or ownership in the franchise are also bound by the non-compete obligations. Body20 can seek injunctive relief and damages if a franchisee breaches or threatens to breach the non-compete agreement, highlighting the importance of adhering to these post-termination restrictions.