After the Fly Fitness agreement expires or terminates, what is the geographic restriction on franchisees operating a similar fitness business to Fly Fitness?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
e Franchised Business, and that gaining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Franchisee and Principal(s) are entering into this Agreement. In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee, and Principal(s) covenant that, except as otherwise approved in writing by Franchisor:
- 19.5.1 During the term of this Agreement, Franchisee and Principal(s) shall not, either directly or indirectly, for themselves 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 Business 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 fitness or exercise business similar to the System;
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, following the expiration or termination of the franchise agreement, a franchisee and their principals are restricted from engaging in a similar fitness or exercise business. This restriction applies for 24 months. During this period, they cannot participate as an owner, partner, director, officer, employee, consultant, or agent in any fitness or exercise business within ten miles of the former Fly Fitness territory or any other Fly Fitness location.
This post-termination covenant aims to prevent former franchisees from leveraging the knowledge, training, and confidential information gained during their time with Fly Fitness to unfairly compete with the franchise system. The restriction covers a broad range of roles and activities, ensuring that former franchisees cannot directly or indirectly operate or be involved in a competing business within the specified radius. This includes not only ownership but also employment or consulting positions.
The FDD also states that these covenants are considered reasonable in terms of time, geographical area, and scope to protect Fly Fitness's goodwill and business interests. However, if any part of the restriction is deemed unreasonable, it can be reduced in scope or duration to make it enforceable. Additionally, Fly Fitness retains the right to reduce the scope of any covenant at its discretion with written notice.
Prospective franchisees should carefully consider these post-termination restrictions and how they might impact their future career options if they decide to leave the Fly Fitness system. It is important to understand the geographical limitations and the types of activities that are prohibited to avoid potential legal issues after the franchise agreement ends.