Can Fly Fitness unilaterally reduce the scope of the non-compete covenant?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 19.7.
Reduction of Time or Scope.
If the period of time or the geographic scope specified above, should be adjudged unreasonable in any proceeding, then the period of time will be reduced by such number of months or the geographic scope will be reduced by the elimination of such portion thereof, or both, so that such restrictions may be enforced for such time and scope as are adjudged to be reasonable.
In addition, Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Article 19 or any portion thereof, without Franchisee's consent, effective immediately upon receipt by Franchisee of written notice thereof, and Franchisee agrees to forthwith comply with any covenant as so modified.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness has the right to unilaterally reduce the scope of the non-compete covenant. Specifically, Fly Fitness can modify the non-compete agreement without the franchisee's consent. This modification becomes effective immediately once the franchisee receives written notice. The franchisee is then obligated to comply with the modified covenant.
This clause gives Fly Fitness significant flexibility to adjust the non-compete terms as they see fit. This could be beneficial in situations where the original scope is deemed too restrictive or impractical. However, it also introduces uncertainty for the franchisee, as the terms of their non-compete agreement could change during the franchise term.
It is important for prospective Fly Fitness franchisees to carefully consider the implications of this unilateral modification clause. While the franchisor may use this power to make the non-compete terms more reasonable, there is also a risk that the changes could negatively impact the franchisee's future business opportunities. Franchisees should seek legal counsel to fully understand their rights and obligations under the non-compete agreement and the potential impact of this clause.
In the event that a court finds the non-compete agreement's time or geographic scope unreasonable, the agreement will be adjusted to a reasonable level. This adjustment will be made by reducing the time or geographic scope to the extent necessary to make the restrictions enforceable. This ensures that some form of non-compete protection remains in place, as long as it is deemed fair and reasonable.