Does the Fly Fitness agreement specify that the developer receives valuable training, trade secrets, and confidential information?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3 Noncompetition Covenants. Developer acknowledges that, pursuant to this Agreement, Developer will receive valuable training, trade secrets and Confidential Information of the System that are beyond the present knowledge, training, and experience of Developer. Developer acknowledges that such specialized training, trade secrets and Confidential Information provide a competitive advantage and will be valuable to him or her in the development and operation of Franchised Businesses, and that gaining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Developer is entering into this Agreement. In consideration for such specialized training, trade secrets, Confidential Information and rights, Developer covenants that, except as otherwise approved in writing by Franchisor:
- 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
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the agreement explicitly states that the developer will receive valuable training, trade secrets, and confidential information. Specifically, Section 8.3 of the agreement highlights that the developer acknowledges receiving specialized training, trade secrets, and confidential information of the Fly Fitness system, which are beyond their current knowledge and experience.
This specialized knowledge is considered a competitive advantage and a primary reason for entering into the agreement. In return for this training, trade secrets, and confidential information, the developer agrees to certain non-competition covenants. These covenants restrict the developer from engaging in activities that could harm Fly Fitness's business, such as diverting customers, participating in competitive businesses, or employing Fly Fitness's personnel.
These non-competition covenants are in effect during the term of the agreement and for 24 months after its expiration or termination. The restrictions extend to a 10-mile radius of the territory or any Fly Fitness location. The agreement also emphasizes the importance of protecting the confidential information and requires the developer to take necessary steps to prevent its unauthorized disclosure. This is a fairly standard clause in franchise agreements to protect the franchisor's intellectual property and business methods.