After termination of employment with a Fly Fitness franchisee, what is the geographic restriction on a Covenantor participating in a competing fitness business?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
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 subject to a geographic restriction after termination of employment or association with a Fly Fitness franchisee. For a period of twenty-four (24) months after termination, the Covenantor cannot participate as an owner, partner, director, officer, employee, or consultant in any fitness or personal trainer business within ten (10) miles of the franchisee's territory or any Fly Fitness location. This restriction applies to managerial, operational, or supervisory capacities.
This non-compete clause is designed to protect Fly Fitness's goodwill and confidential information. The FDD states that these covenants are considered reasonable in terms of time, geographical area, and scope of activity. However, if any part of the restriction is deemed unreasonable, the franchisor has the right to reduce the time or geographic scope to make it enforceable.
Fly Fitness also emphasizes the importance of these restrictions by stating that a breach would cause irreparable injury to the franchisor. As a result, Fly Fitness is entitled to seek injunctive relief to prevent any violation of the non-compete agreement. Franchisees are responsible for ensuring their employees comply with these covenants.
Prospective franchisees should carefully review these non-compete terms and ensure they understand the implications for their employees. It is also important to note that these restrictions may be subject to change based on legal challenges or the franchisor's discretion.