Can a Fly Fitness Developer interfere with the business of the Franchisor or any Fly Fitness franchisees after the agreement terminates?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, 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 the Franchised Businesses to be developed hereunder or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; or (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any Competitive Business within ten (10) miles of the Territory or any Fly Fitness; or (iii) seek to employ any person who is at that time employed by Franchisor, or otherwise induce such person to leave his or her employment 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 business of the Franchisor or any Fly Fitnessfranchisees.
8.4 Reasonableness of Restrictions.
Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
- 8.5 Reduction of Time or Scope.
If the period of time or the geographic scope specified above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a Developer is restricted from interfering with the Fly Fitness business after the termination of the agreement. Specifically, for a period of 24 months after the agreement ends or upon a transfer, the Developer cannot engage in activities that could harm the Fly Fitness system.
These restrictions include not diverting business or customers to competitors, participating in a competitive business within ten miles of the Territory or any Fly Fitness location, and soliciting employees of Fly Fitness. The Developer is also prohibited from taking any action that could harm the goodwill associated with the Fly Fitness brand or disrupt the business of the Franchisor or its franchisees.
The Fly Fitness agreement states that these non-compete covenants are considered fair and reasonable, acknowledging that the Developer possesses other skills and experience to generate income from other sources. However, if any of these restrictions are deemed unreasonable in a legal proceeding, the agreement allows for a reduction in the time period or geographic scope to ensure enforceability.
These measures are in place to protect Fly Fitness's confidential information, trade secrets, and the overall integrity of the franchise system. Prospective developers should carefully consider these post-termination restrictions and how they might impact their future business endeavors.