Under the Fly Fitness agreement, what is the geographic scope of the post-term non-compete restriction?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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, the post-term non-compete agreement restricts franchisees and their principals from participating in any fitness or exercise business within ten miles of their former territory or any other Fly Fitness location. This restriction applies for a period of twenty-four months following the expiration or termination of the franchise agreement or after a transfer of the franchise.
This non-compete clause prevents former Fly Fitness franchisees from leveraging the brand's reputation and confidential information to unfairly compete with existing franchisees or the franchisor. The agreement specifies that franchisees and principals are prohibited from diverting business or customers from the Fly Fitness system to any competitor, either directly or indirectly. They are also barred from seeking to employ individuals currently working for Fly Fitness or its other franchisees.
The FDD also states that Fly Fitness can reduce the scope of the non-compete agreement at its discretion by providing written notice to the franchisee. Furthermore, the document indicates that the restrictions are considered fair and reasonable, given the skills, experience, and education of the franchisee and principals, which should allow them to pursue income from other ventures. However, if any court deems the geographic scope or time period unreasonable, it can be reduced to what is considered enforceable.
Fly Fitness emphasizes the importance of these restrictions by stating that violations would cause immediate and irreparable harm to the franchisor, entitling them to injunctive relief. This means Fly Fitness can seek a court order to prevent any conduct that breaches the non-compete terms. Prospective franchisees should carefully consider these restrictions and their potential impact on their future business activities before entering into a franchise agreement with Fly Fitness.