Does the Fly Fitness agreement specify that the non-disclosure covenant is perpetually binding?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
mination or expiration of this Agreement, all rights and licenses granted hereunder to Developer shall immediately terminate and Developer shall (i) immediately cease all development operations pursuant to this Agreement; and (ii) comply with the non-disclosure and non-competition covenants contained in Article 8.
8. NON-DISCLOSURE AND NON-COMPETITION COVENANTS.
8.1 Confidential Information. Developer acknowledges and accepts that during the term of this Agreement, Developer will have access to Franchisor's trade secrets, including, but not limited to, formulas, recipes, methods, processes, customer lists, vendor partnerships and/or relationships, sales and technical information, financial information, costs,
product prices and names, software tools and applications, website and/or email design, products, services, equipment, technologies and procedures relating to the operation of the Franchised Business; the Manual; methods of advertising and promotion; instructional materials; any other information which Franchisor may or may not specifically designate as "confidential" or "proprietary"; and the components of the System, whether or not such information is protected or protectable by patent, copyright, trade secret or other proprietary rights (collectively referred to herein as the "Confidential Information"). Developer shall not, during the term of this Agreement and thereafter, communicate or divulge to, or use for the benefit of, any other person or entity, and, following the expiration or termination of this Agreement, shall not use for Developer's own benefit, any Confidential Information that may be communicated to Developer or of which Developer may be apprised in connection with the development of Franchised Businesses under the terms of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the non-disclosure covenant within the franchise agreement is indeed perpetually binding. Specifically, the agreement states that the franchisee (referred to as "Developer") shall not communicate, divulge, or use any Confidential Information for the benefit of any other person or entity during the term of the agreement and thereafter. This obligation extends even after the expiration or termination of the agreement, ensuring that the franchisee cannot use such information for their own benefit.
This perpetual obligation means that a Fly Fitness franchisee is legally bound to protect the franchisor's confidential information indefinitely. This includes trade secrets, formulas, customer lists, financial information, and any other proprietary information related to the operation of the Fly Fitness business. The franchisee is also prohibited from copying, duplicating, or recording any Confidential Information without the franchisor's prior written consent.
The implications of this clause are significant for a prospective Fly Fitness franchisee. It means that even long after they have left the Fly Fitness system, they cannot use any of the knowledge or information gained during their time as a franchisee to compete with Fly Fitness or benefit another business. This is a stricter than non-disclosure agreements in some other franchise systems, which often have a defined time limit.
While perpetual non-disclosure agreements are not uncommon, prospective franchisees should carefully consider the long-term implications of such a clause. It is advisable to seek legal counsel to fully understand the scope of the confidential information covered and the restrictions it places on future business activities. Franchisees should also ensure they have robust systems in place to protect confidential information during their time with Fly Fitness to avoid any potential breaches of the agreement.