Under the Fly Fitness franchise agreement, what is the franchisee prohibited from doing that could adversely affect the franchisor's rights?
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.
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, franchisees and their principals are prohibited from certain actions that could harm the franchisor. Specifically, they cannot divert or attempt to divert business or customers to competitors, participate in similar fitness businesses, or seek to employ individuals working for Fly Fitness or its franchisees. These restrictions aim to protect Fly Fitness's market position and brand integrity.
These prohibitions extend to actions that could be injurious or prejudicial to the goodwill associated with the Fly Fitness brand and system. Franchisees are barred from interfering with, disturbing, disrupting, decreasing, or otherwise jeopardizing the business of Fly Fitness or any of its franchisees or affiliated outlets. This clause is designed to prevent franchisees from engaging in activities that could undermine the overall success and reputation of the Fly Fitness network.
These restrictions are in place to protect Fly Fitness's interests by preventing franchisees from leveraging the franchisor's established brand, system, and confidential information to benefit competitors or to otherwise act in ways that could harm the Fly Fitness network. Such clauses are common in franchise agreements to ensure that franchisees remain committed to the success of the entire franchise system and do not engage in activities that could undermine the brand or other franchisees' businesses.