Does the Fly Fitness agreement define what constitutes a 'Competitive Business'?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3.1 During the term of this Agreement, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of, or in conjunction with, any person or entity (i) divert, or attempt to divert, any business or customer of any Franchised Business to be developed hereunder or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any restaurant or eatery business similar to the System ("Competitive Business"); or (iii) seek to employ any person who is at that time employed by Franchisor; or (iv) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (v) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the
business of the Franchisor or any Fly Fitness franchisees or Franchisor-affiliated outlets.
8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of or in conjunction with any person or entity (i) divert, or attempt to divert, any business or customer of the Franchised Businesses to be developed hereunder or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any Competitive Business within ten (10) miles of the Territory or any Fly Fitness; or (iii) seek to employ any person who is at that time employed by Franchisor, or otherwise induce such person to leave his or her employment or (iv) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (v) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Fly Fitnessfranchisees.
8.4 Reasonableness of Restrictions.
Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope.
If the period of time or the geographic scope specified above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the agreement does define what constitutes a 'Competitive Business.' During the term of the agreement, a franchisee cannot participate as an owner, partner, director, officer, employee, consultant, or agent in any restaurant or eatery business similar to the Fly Fitness system. This restriction applies unless Fly Fitness provides written approval otherwise.
After the agreement expires or terminates, or upon a transfer, the franchisee is restricted for 24 months. During this time, the franchisee cannot participate in a 'Competitive Business' within ten miles of the Territory or any Fly Fitness location. This includes acting as an owner, partner, director, officer, employee, consultant, or agent.
These non-compete covenants are acknowledged by the franchisee as fair and reasonable, considering their other skills, experience, and education. The agreement also states that if any restriction is deemed unreasonable, the time or geographic scope will be reduced to what is considered reasonable, ensuring the restrictions are enforceable.