After the Fitstop agreement terminates, what is the geographic radius around other System Businesses where a franchisee cannot operate a similar business without consent?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
otherwise induce, directly or indirectly, such person to leave such employment. This paragraph shall not be violated if such person has left the employment of any of the foregoing parties for a period in excess of 180 calendar days;
- 18.3.3 Without our prior written consent, you shall not, directly or indirectly, engage in, acquire any financial or beneficial interest (including interests in corporations, partnerships, trusts, unincorporated associations, or joint ventures) in, or become a landlord for any business, which is similar to the Franchised Business, from a physical location within 25 miles of (a) the Premises, (b) the perimeter of the Designated Territory, or (c) the location of any other System Business that is open or under development as of the date this Agreement is terminated or expires, except that the Parties agree and acknowledge that this covenant shall not be applicable to ownership of less than 2% of the shares of a company whose shares are listed and traded on a national or regional securities exchange by Franchise or any Franchise Owner;
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is restricted from engaging in any similar business within a 25-mile radius of specific locations after the franchise agreement terminates.
This restriction applies to operating a similar business from a physical location within 25 miles of (a) the former franchisee's Premises, (b) the perimeter of the Designated Territory, or (c) the location of any other Fitstop System Business that is open or under development as of the date the Agreement is terminated or expires. However, this covenant does not apply to ownership of less than 2% of the shares of a company whose shares are listed and traded on a national or regional securities exchange by the Franchise or any Franchise Owner.
This post-term non-compete obligation means that a former Fitstop franchisee must avoid any competitive business activity within this 25-mile radius, ensuring they do not directly compete with existing Fitstop locations or territories. This restriction is in place to protect Fitstop's market and other franchisees. Fitstop also retains the right to modify the scope of this covenant without the franchisee's consent, effective immediately upon written notice.