What happens to the Fly Fitness developer's rights and licenses upon termination or expiration of the agreement?

According to Fly Fitness's 2024 Franchise Disclosure Document, upon the termination or expiration of the Development Agreement, all rights and licenses granted to the Developer immediately terminate. The Developer must cease all development operations related to the agreement and comply with the non-disclosure and non-competition covenants outlined in Article 8 of the agreement. This means the developer can no longer build new Fly Fitness locations.

Article 8 includes non-compete clauses. For 24 months after the agreement ends, the Developer cannot (i) divert business from existing Fly Fitness franchisees, (ii) participate in any competitive business within 10 miles of the Territory or any Fly Fitness location, (iii) solicit Fly Fitness employees, or (iv) take any action that harms the goodwill associated with the Fly Fitness brand. These restrictions are designed to protect Fly Fitness's market position and prevent former developers from using inside knowledge to compete unfairly.

The Fly Fitness agreement states that these non-compete restrictions are considered fair and reasonable, acknowledging that the Developer has other skills and experience to earn income from other sources. However, if any restriction is deemed unreasonable in court, the time period or geographic scope can be reduced to make it enforceable. This ensures that the restrictions are not overly burdensome while still protecting Fly Fitness's interests.