What is the effect of Section 19.3 on a Fitstop franchisee's in-term covenant not to compete?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
, System, or in any Confidential Information or other intellectual property rights associated with the same; (ii) any of the restrictive covenants contained in this Agreement; and (iii) any of Franchisee's payment obligations under this Agreement.
- ©2024 Fitstop USA, Inc. 19.3 Injunctive Relief. You acknowledge and agree that irreparable harm could be caused to us by your violation of certain provisions of this Agreement and, as such, in addition to any other relief available at law or equity, we shall be entitled to obtain in any court of competent jurisdiction, without bond, restraining orders or temporary or permanent injunctions in order to enforce, among other items, the provisions of this Agreement relating to: (i) your unauthorized use of the Proprietary Marks and Confidential Information (including any proprietary software used in connection with the Franchised Business); (ii) the in-term covenant not to compete, as well as any other violations of the restrictive covenants set forth in this Agreement; (iii) your obligation upon termination or expiration of this Agreement; (iv) disputes and controversies based on or arising under the Lanham Act, or otherwise
involving the Proprietary Marks, as now or hereafter amended; (v) disputes and controversies involving enforcement of our rights with respect to confidentiality under this Agreement; and (vi) to prohibit any act or omission by you or your representatives that constitutes a violation of applicable law, threatens the Franchise System or threatens other System franchisees.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Section 19.3 allows Fitstop to seek immediate injunctive relief in the event a franchisee violates the in-term covenant not to compete. This means Fitstop does not have to wait to prove monetary damages in court, but can instead ask a court to immediately order the franchisee to stop the violating behavior. This is in addition to any other legal or equitable remedies Fitstop might pursue.
Fitstop is entitled to seek restraining orders or temporary or permanent injunctions from a court of competent jurisdiction without having to post a bond. These injunctions can enforce provisions of the agreement relating to the in-term covenant not to compete, unauthorized use of proprietary marks and confidential information, and obligations upon termination or expiration of the agreement.
The franchisee's only recourse if an injunction is issued is to seek its dissolution by prevailing in a subsequent legal proceeding. This highlights the importance of a Fitstop franchisee fully understanding and complying with the in-term covenant not to compete, as the consequences of violating it can be immediate and significant.