In the Fly Fitness franchise agreement, do franchisee or principal obligations survive if the franchisee or principal transfers any interest?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Franchisee and Principal(s) shall not, either directly or indirectly, for themselves 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 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 fitness or exercise business within ten (10) miles of the Territory or any Fly Fitness location; or (iii) seek to employ any person who is at that time employed by Franchisor or by any other System franchisee, or otherwise induce
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, both the franchisee and the principal(s) have specific obligations that continue even after a transfer of interest. Specifically, for a period of twenty-four months after a transfer, the franchisee and principal(s) are restricted from engaging in activities that could harm the Fly Fitness system.
These restrictions include not diverting business or customers to competitors, not participating in any fitness or exercise business within ten miles of the Territory or any Fly Fitness location, and not attempting to employ anyone currently employed by Fly Fitness or its franchisees. These obligations are designed to protect Fly Fitness's interests and goodwill even after the franchisee or principal(s) are no longer directly involved with the business.
This means that even if a franchisee sells their Fly Fitness franchise, they (and their principals) cannot immediately open a competing business nearby or poach employees from the Fly Fitness network. This non-compete obligation is a fairly standard practice in franchising to ensure that franchisees don't use the knowledge and experience gained from the franchise system to directly compete against it shortly after exiting the business. Prospective franchisees should carefully consider these post-transfer obligations, as they could impact their future business endeavors.