After termination of employment with a Fly Fitness franchisee, for how long is the Covenantor restricted from participating in a competing 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 restricted from participating in a competing fitness or personal trainer business for twenty-four (24) months after termination of employment or association with a Fly Fitness franchisee. This restriction applies to acting as an owner, partner, director, officer, employee, or consultant in any similar business.
This non-compete agreement aims to protect Fly Fitness's goodwill and confidential information by preventing former employees from immediately joining or starting competing businesses. The restriction is limited to a ten (10) mile radius of the franchisee's territory or any Fly Fitness location. This means a former employee cannot work in a similar fitness business within that specified area for the two-year duration.
Fly Fitness also has the right to reduce the scope of the non-compete agreement at its discretion, and the Covenantor must comply with any modifications immediately upon written notice. The FDD states that the restrictions are considered reasonable to protect Fly Fitness's business interests. If any part of the covenant is deemed unreasonable, the terms will be adjusted to be enforceable.
This non-compete clause is a standard practice in franchising to safeguard the brand and prevent unfair competition. Prospective franchisees should understand the implications of this clause for their employees and how it might affect their ability to hire or retain staff. Franchisees are responsible for ensuring their employees comply with the terms of the agreement.