During the term of the Fly Fitness agreement, can a franchisee be an employee of a fitness business similar to Fly Fitness?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Franchisee, and Principal(s) covenant that, except as otherwise approved in writing by Franchisor:
19.5.1 During the term of this Agreement, 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; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any fitness or exercise business similar to the System; or (iii) seek to employ any person who is at that time employed by Franchisor or by any other System franchisee, 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 Fitness franchisees or Franchisor-affiliated outlets.
19.5.2.
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, during the term of the franchise agreement, a franchisee and its principals are restricted from participating in any fitness or exercise business similar to the Fly Fitness system. Specifically, they cannot act as an owner, partner, director, officer, employee, consultant, or agent in such a business. This restriction applies unless Fly Fitness provides written approval otherwise.
This means that as a Fly Fitness franchisee, you and your business principals are prohibited from holding any position, whether as an owner or an employee, in a competing fitness business during the term of your agreement. This is a fairly standard non-compete clause in franchising, designed to protect the brand and prevent franchisees from using the franchisor's knowledge and resources to benefit a competitor.
The restriction aims to prevent franchisees from diverting business or customers away from the Fly Fitness franchise. It also prevents them from employing or recruiting employees of Fly Fitness or other franchisees within the system. This ensures that franchisees are fully committed to the success of their Fly Fitness location and do not engage in activities that could harm the brand or other franchisees.
After the franchise agreement expires or is terminated, a similar restriction applies for 24 months within a 10-mile radius of the franchisee's territory or any Fly Fitness location. This post-term restriction is also common in franchise agreements to further protect the franchisor's interests after the franchisee leaves the system.