During employment 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
o do any act that would or would likely be injurious or prejudicial to the goodwill associated with the System.
- f. Covenantor agrees that no Confidential Information may be reproduced, in whole or in part, without written consent.
2. Covenants Not to Compete.
- 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.
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 with a Fly Fitness franchisee. Specifically, the Covenantor cannot participate as an owner, partner, director, officer, employee, consultant, or agent in any fitness or personal trainer business substantially similar to the Fly Fitness system. This restriction is designed to protect Fly Fitness's goodwill and unique qualities, as well as the confidential information disclosed to the Covenantor.
This non-compete obligation extends both during the Covenantor's employment and for a period of time after their employment ends. Post-employment, the Covenantor is restricted for twenty-four (24) months from participating in a similar fitness business within ten (10) miles of the franchisee's territory or any Fly Fitness location. These restrictions are in place to prevent the diversion of business or customers to competitors and to safeguard the Fly Fitness system from unfair competition.
The FDD also states that the franchisee is responsible for ensuring that the Covenantor adheres to the agreement. If the Covenantor breaches the agreement, Fly Fitness would be irreparably injured and is entitled to a temporary or permanent injunction and a decree for specific performance, without needing to show actual harm or provide a bond. This highlights the importance Fly Fitness places on protecting its business interests and confidential information through these non-compete agreements.
Prospective franchisees should carefully review these non-compete provisions and ensure that their employees understand and comply with them. Franchisees should also be aware of their responsibility to enforce these agreements and the potential legal consequences of a breach. Understanding these obligations is crucial for maintaining the integrity of the Fly Fitness system and protecting the franchisee's investment.