Does the confidentiality covenant in the Fly Fitness agreement survive the termination of the agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
b. In further consideration for the disclosure to Covenantor of the Confidential Information and to protect the goodwill and unique qualities of the System, Covenantor further agrees and covenants that, upon the termination of Covenantor's employment or association with Franchisee and continuing for twenty-four (24) months thereafter, Covenantor shall not, for Covenantor 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 Fly Fitness System to any competitor, by direct or indirect inducement or otherwise, and/or
(ii) participate as an owner, partner, director, officer, employee, or consultant or serve in any other managerial, operational, or supervisory capacity in any fitness or personal trainer within the within ten (10) miles of Franchisee's Territory or any Fly Fitness location.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to the 2024 Fly Fitness Franchise Disclosure Document, the confidentiality agreement extends beyond the termination of employment or association with the franchisee. Specifically, the confidentiality obligations placed on the Covenantor (typically an employee) continue for a period of twenty-four months after the termination of their employment or association with the Fly Fitness franchisee. This means that even after someone leaves their position, they are still legally bound to protect Fly Fitness's confidential information and refrain from actions that could harm the brand's goodwill.
This extended confidentiality covenant is designed to protect Fly Fitness's trade secrets, operational methods, and other proprietary information. The agreement explicitly states that the Covenantor cannot divert business, participate in similar fitness businesses, or work to employ individuals associated with Fly Fitness within a ten-mile radius of the franchisee's territory or any Fly Fitness location for those 24 months. This provision aims to prevent former employees from using their knowledge of Fly Fitness's operations to unfairly compete against the franchise or other franchisees in the system.
For a prospective Fly Fitness franchisee, this clause highlights the importance of thoroughly vetting employees and ensuring they understand their confidentiality obligations. Franchisees must also be prepared to enforce these agreements if necessary to protect their business interests. The FDD also indicates that the franchisee is responsible for ensuring that the Covenantor adheres to the agreement. This responsibility underscores the franchisee's role in safeguarding Fly Fitness's confidential information and maintaining the integrity of the franchise system.
It is also important to note that the agreement contains clauses addressing the reasonableness of the restrictions. If a court finds the time period or geographic scope to be unreasonable, adjustments can be made to ensure enforceability. Fly Fitness also retains the right to reduce the scope of any covenant, providing flexibility in managing these agreements. This demonstrates an understanding of the legal considerations surrounding non-compete and confidentiality agreements, which can vary by jurisdiction.