Is a Fly Fitness developer allowed to participate as an owner in a Competitive Business during the term of the agreement?
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, during the term of the agreement, a developer is generally prohibited from participating as an owner in a Competitive Business. Specifically, the developer cannot participate as an owner, partner, director, officer, employee, consultant, or agent in any restaurant or eatery business similar to the Fly Fitness system, referred to as a "Competitive Business." This restriction applies unless Fly Fitness provides written approval otherwise.
This non-compete clause is in place to protect Fly Fitness's interests, trade secrets, and confidential information, which the developer gains access to through the franchise agreement. The FDD states that the specialized training, trade secrets, and confidential information provide a competitive advantage and are a primary reason why the developer enters into the agreement.
This restriction ensures that developers focus their efforts on growing the Fly Fitness brand and do not use the knowledge and resources gained from Fly Fitness to benefit a competing business. Prospective developers should carefully consider this restriction and ensure they are comfortable with it before entering into a franchise agreement with Fly Fitness. If a developer wishes to participate in a Competitive Business, they must obtain written approval from Fly Fitness, which may or may not be granted.