What rights does Fitstop have in the event of a violation of the restrictive covenants?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
ssly agree that you will be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section.
- 18.5 Interpretation of Restrictive Covenants. You understand and acknowledge that we shall have the right, in our sole discretion, to reduce the scope of any covenant set forth in this Section without your consent effective immediately upon written notice to you. You agree that you shall comply with any covenant as so modified, which modified covenant shall be fully enforceable notwithstanding the provisions of any other Sections hereof.
- 18.6 No Defense to Violation of Covenants. You expressly agree that the existence of any claims that you or your employees may have against us, whether or not arising from this Agreement, shall not constitute a defense to the enforcement of us of the covenants in this Section. You agree to pay all costs and expenses (including reasonable attorneys' fees and all costs of court) incurred by us in connection with the enforcement of this Section of this Agreement.
- ©2024 Fitstop USA, Inc. 18.7 Irreparable Harm and Right to Injucntive Relief and Remedies. You acknowledge that a violation of any of the terms of this Section would result in irreparable injury to us for which no adequate remedy at law may be available. You acknowledge that the Competitive Information described herein has
been developed and compiled through our time and effort in the fitness industry. Accordingly, you acknowledge that, in addition to our remedies at law, we may seek and obtain preliminary and permanent injunctive relief restraining the breach or threatened breach by you and you consent to the issuance of an injunction prohibiting any conduct by you in violation of this Section.
Section 19: Disputes and Dispute Resolution
- 19.1 Internal Dispute Resolution. You must first bring any claim or dispute arising out of or related to the Franchised Business and/or this Agreement to our management after you have provided us with written notice as prescribed in Section 19.6 of this Agreement, and subsequently make every commercially reasonable effort to settle any such dispute or claim internally. You must exhaust this internal dispute resolution procedure before bringing any action or claim before a third-party mediator or other adjudicating party. This agreement to first attempt resolution of disputes internally shall survive termination or expiration of this Agreement.
- 19.2 Mediation. At our option, all claims or disputes between you and us (and/or our affiliates) arising out of, or in any way relating to, this Agreement or any other agreement by and between such parties, or any of the parties' respective rights and obligations arising from such agreement, which are not first resolved through the internal dispute resolution procedure sent forth in Section 19.1 above, will be submitted first to mediation to take place at our then-current corporate headquarters under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Mediation Rules then in effect. Before commencing any legal action against us and/or our affiliates with respect to any such claim or dispute, you must submit a notice to us that specifies in detail the precise nature and grounds of such claim or dispute per Section 19.6 below. W e will then have a period of 30 days following receipt of such notice within which to notify you as to whether we and/or our affiliates are exercising the right to mediate under this Section (the "Applicable Notice Period"). During the Applicable Notice Period, both parties will attempt to resolve the matter internally per Section 19.1 above. You may and must not commence any action against us or our affiliates with respect to any claim or dispute in any court, unless and until: (i) we fail to exercise its option to submit such claim or dispute to mediation;
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop has several rights and remedies available if a franchisee violates the restrictive covenants outlined in the franchise agreement. Fitstop can modify the scope of any covenant immediately upon written notice to the franchisee, and the franchisee must comply with the modified covenant. The existence of any claims the franchisee may have against Fitstop does not constitute a defense against Fitstop's enforcement of these covenants. Fitstop is entitled to recover all costs and expenses, including reasonable attorney's fees and court costs, incurred while enforcing these sections of the agreement.
Fitstop emphasizes that a violation of the restrictive covenants would result in irreparable injury for which monetary damages may not be an adequate remedy. Because Fitstop has invested time and effort in developing competitive information within the fitness industry, the company may seek and obtain preliminary and permanent injunctive relief to prevent any breach or threatened breach of these covenants by the franchisee. The franchisee consents to the issuance of an injunction prohibiting any conduct that violates these restrictions.
Furthermore, Fitstop is not required to attempt mediation if a claim involves a violation (or threatened violation) of the restrictive covenants contained in the agreement. Fitstop is entitled to obtain restraining orders or temporary or permanent injunctions from any court of competent jurisdiction, without needing to post a bond, to enforce the provisions related to the in-term covenant not to compete and other violations of the restrictive covenants. The franchisee's only remedy if such an injunction is entered is to seek its dissolution if they prevail in a subsequent proceeding. This multifaceted approach underscores the importance Fitstop places on franchisees adhering to the restrictive covenants and the measures it can take to protect its interests.