During employment or association with a Fly Fitness franchisee, is a covenantor allowed to divert business from other franchisees to a competitor?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
a. In order to protect the goodwill and unique qualities of the System, and in consideration for the disclosure to Covenantor of the Confidential Information, Covenantor further agrees and covenants that during Covenantor's employment or association with Franchisee, 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 Fly Fitness outlet or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise, and/or
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a covenantor is not allowed to divert business from other franchisees to a competitor during their employment or association with a Fly Fitness franchisee. The agreement specifies that to protect the goodwill and unique qualities of the Fly Fitness system, the covenantor is prohibited from diverting or attempting to divert any business or customer of the Fly Fitness outlet, or of other franchisees in the system, to any competitor. This includes any direct or indirect inducement.
This restriction is in place to prevent unfair competition within the Fly Fitness franchise network. By preventing covenantors from diverting business, Fly Fitness aims to maintain a level playing field among its franchisees and protect the overall brand integrity. This ensures that each franchisee has the opportunity to succeed based on their own efforts and adherence to the Fly Fitness system, rather than being undermined by individuals who might seek to benefit a competitor.
The agreement also extends beyond the termination of employment or association with the franchisee. For a period of twenty-four months after termination, the covenantor is still prohibited from diverting or attempting to divert business from the franchised business or other franchisees to any competitor. This post-termination restriction further safeguards the Fly Fitness system and its franchisees from potential long-term harm caused by former employees or associates who might try to leverage their knowledge and experience to benefit a competing business.
Fly Fitness also emphasizes the importance of confidentiality, requiring covenantors to maintain the confidentiality of the Confidential Information and use it only in the course of their employment or association with the franchisee. This includes not making copies of confidential documents or disclosing confidential information to unauthorized parties. These measures collectively aim to protect Fly Fitness's competitive advantage and ensure the continued success of its franchise system.