Can Fitstop seek injunctive relief for violations of restrictive covenants?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
(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.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop can seek injunctive relief for violations of restrictive covenants. The FDD states that Fitstop may seek preliminary and permanent injunctive relief to restrain any breach or threatened breach of the agreement by a franchisee. The franchisee consents to the issuance of an injunction prohibiting any conduct violating the agreement.
Specifically, Fitstop can seek restraining orders or temporary or permanent injunctions from a court of competent jurisdiction, without bond, to enforce provisions relating to the unauthorized use of proprietary marks and confidential information, in-term covenants not to compete, and any other violations of the restrictive covenants in the agreement. This also applies to the franchisee's obligations upon termination or expiration of the agreement, disputes arising under the Lanham Act, and actions that threaten the franchise system or other franchisees.
The document clarifies that the franchisee's only remedy if such an injunction is entered is to seek its dissolution if they prevail in a subsequent proceeding. Furthermore, the agreement specifies that Fitstop is not required to attempt mediation if the dispute involves a violation, threatened violation, or imminent risk of violating any of the restrictive covenants contained in the agreement.