During employment or association with a Fly Fitness franchisee, can a covenantor participate in a fitness business substantially similar to the Fly Fitness system?
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
(ii) participate as an owner, partner, director, officer, employee, consultant, or agent or serve in any other capacity in any fitness or personal trainer business substantially similar to the System.
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.
c. The parties acknowledge and agree that each of the covenants contained herein are reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
d. If the period of time or the geographic scope specified Section 2.b. 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.
In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Agreement or any portion thereof, without Covenantor's or Franchisee's consent, effective immediately upon receipt by Covenantor of written notice thereof, and Covenantor agrees to forthwith comply with any covenant as so modified.
3. General.
a. Franchisee shall take full responsibility for ensuring that Covenantor acts as required by this Agreement.
- b. Covenantor agrees that in the event of a breach of this Agreement, Franchisor would be irreparably injured and be without an adequate remedy at law.
Therefore, in the event of such a breach, or threatened or attempted breach of any of the provisions hereof, Franchisee is obligated to enforce the provisions of this Agreement and shall be entitled, in addition to any other remedies that are made available to it at law or in equity, to a temporary and/or permanent injunction and a decree for the specific performance of the terms of this Agreement, without the necessity of showing actual or threatened harm and without being required to furnish a bond or other security.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a covenantor (employee) is restricted from participating in a similar fitness business during their employment or association with a Fly Fitness franchisee. To protect Fly Fitness's goodwill and unique qualities, the covenantor cannot engage in any fitness or personal trainer business substantially similar to the Fly Fitness system as an owner, partner, director, officer, employee, consultant, or agent, or in any other capacity. This restriction is in place to prevent the diversion of business or customers to competitors.
This non-compete obligation is tied to the covenantor's access to confidential information and the need to protect the Fly Fitness system from unfair competition. The agreement specifies that the covenantor acknowledges the value of the confidential information they receive and that this serves as consideration for their agreement to these restrictions. This ensures that employees with knowledge of Fly Fitness's operational methods and trade secrets do not use that information to benefit a competing business while associated with a Fly Fitness franchisee.
Upon termination of employment or association with the Fly Fitness franchisee, the covenantor is further restricted for a period of twenty-four (24) months. During this time, they cannot participate in a similar fitness business within ten (10) miles of the franchisee's territory or any Fly Fitness location. These covenants are designed to protect Fly Fitness's market and prevent former employees from leveraging their knowledge to compete directly with the franchise shortly after leaving. Fly Fitness maintains the right to modify these covenants, ensuring they are reasonable and enforceable.
Fly Fitness places the responsibility on the franchisee to ensure that the covenantor complies with the agreement. In the event of a breach or threatened breach of the agreement, Fly Fitness is entitled to seek legal remedies, including injunctive relief and specific performance, to protect its interests. This underscores the importance of franchisees actively managing and enforcing these non-compete agreements with their employees to safeguard the Fly Fitness system.