Under what condition can a Fly Fitness developer engage in activities otherwise prohibited by the non-competition covenants?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
In consideration for such specialized training, trade secrets, Confidential Information and rights, Developer covenants that, except as otherwise approved in writing by Franchisor:
- 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
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a developer can engage in activities otherwise prohibited by the non-competition covenants if they receive written approval from Fly Fitness. Specifically, the document states that the developer covenants not to engage in certain competitive activities, "except as otherwise approved in writing by Franchisor".
During the term of the agreement, the developer is restricted from diverting business from Fly Fitness, participating in similar eatery businesses, seeking to employ individuals employed by Fly Fitness, or performing any action that could harm the goodwill associated with the Fly Fitness brand. These restrictions are put in place because Fly Fitness developers will receive valuable training, trade secrets, and confidential information that provide a competitive advantage.
This written approval provides a potential avenue for a developer to pursue business activities that might otherwise be considered a breach of the non-competition agreement. However, securing such approval is not guaranteed and would likely depend on the specific circumstances and the potential impact on Fly Fitness. It is important to note that without this written approval, the developer is bound by the non-competition covenants outlined in the agreement.