Does the Fly Fitness non-compete agreement prevent a Developer from attempting to divert business from other franchisees in the System?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3.1 During the term of this Agreement, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of, or in conjunction with, any person or entity (i) divert, or attempt to divert, any business or customer of any Franchised Business to be developed hereunder or of other franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any restaurant or eatery business similar to the System ("Competitive Business"); or (iii) seek to employ any person who is at that time employed by Franchisor; or (iv) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (v) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the
business of the Franchisor or any Fly Fitness franchisees or Franchisor-affiliated outlets.
8.3.2 Upon the expiration or earlier termination of this Agreement or upon a Transfer and continuing for twenty-four (24) months thereafter, Developer shall not, either directly or indirectly, for himself or herself 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 Businesses to be developed hereunder 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 Competitive Business within ten (10) miles of the Territory or any Fly Fitness; or (iii) seek to employ any person who is at that time employed by Franchisor, or otherwise induce such person to leave his or her employment or (iv) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (v) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Fly Fitnessfranchisees.
8.4 Reasonableness of Restrictions.
Developer acknowledges and agrees that the covenants not to compete set forth in this Agreement are fair and reasonable and will not impose any undue hardship on Developer since Developer has other considerable skills, experience and education which afford Developer the opportunity to derive income from other endeavors.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to the 2024 Fly Fitness Franchise Disclosure Document, the non-compete agreement does address the diversion of business from other franchisees within the Fly Fitness system. During the term of the agreement, the Developer is prohibited from diverting or attempting to divert business or customers from any Franchised Business or other franchisees in the System to any competitor. This includes direct or indirect inducement.
After the agreement expires or terminates, the Developer is restricted for 24 months from diverting or attempting to divert business or customers of the Franchised Businesses or other franchisees in the System to any competitor. This restriction applies within a 10-mile radius of the Territory or any Fly Fitness location. The Developer also cannot interfere with the business of Fly Fitness franchisees.
These non-compete terms ensure that Developers cannot leverage their knowledge and experience gained during the agreement to harm existing Fly Fitness businesses, protecting the brand and its franchisees. The agreement also acknowledges that the Developer has other skills and experience to derive income from other endeavors, so the restrictions are fair and reasonable.