When does the post-term covenant against competition begin for a Fitstop franchisee?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.3 Post-Term Covenant(s) Against Competition and Other Restrictive Covenants. In consideration of the aforementioned valuable consideration, for a continuous, uninterrupted period for 2 calendar years after the Term, commencing upon expiration, termination, assignment, or transfer of this Agreement, regardless of the cause, you agree to the following:
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the post-term covenant against competition begins immediately upon the expiration, termination, assignment, or transfer of the Franchise Agreement. This covenant lasts for a continuous, uninterrupted period of two calendar years.
This means that for two years after a Fitstop franchise agreement ends (regardless of the reason), the franchisee is restricted from certain competitive activities. These restrictions are put in place to protect Fitstop's interests, including their confidential information and relationships with employees and members.
Specifically, the franchisee agrees not to disclose competitive information, employ or solicit Fitstop's employees or other franchisees' employees, or engage in activities that could harm the goodwill associated with the Fitstop brand. These restrictions are fairly standard in franchising to protect the franchisor's business model and market position after a franchisee leaves the system.
It is important for prospective Fitstop franchisees to carefully review Section 18 of the Franchise Agreement to fully understand the scope and limitations of these post-term covenants. Franchisees should also be aware that Fitstop can seek injunctive relief to enforce these covenants, meaning a court order could prevent a former franchisee from engaging in prohibited activities.