Does the Fly To Fit agreement specify that the non-compete applies after a transfer of the franchise?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) Restriction In Term. During the term of this Agreement, neither Franchisee, any Owner, nor any spouse of an Owner (the "Restricted Parties") shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term. For two years after this Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer), no Restricted Party shall directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor within five miles of Franchisee's Territory or the territory of any other Fly To Fit business operating on the date of termination or transfer, as applicable. If this Agreement is terminated before the Territory is determined, then the area of noncompetition will the Development Area and the territory of any other Fly To Fit business operating on the date of termination.
- (c) Interpretation.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the non-compete agreement does apply after a transfer of the franchise. Specifically, the document states that for two years after the agreement expires or is terminated for any reason, or if applicable, for two years after a transfer, the restricted parties are subject to the non-compete stipulations. These parties cannot have any ownership interest, lend money, provide financial assistance, provide services to, or be employed by any competitor within five miles of the franchisee's territory or the territory of any other Fly To Fit business operating on the date of termination or transfer.
This means that if a Fly To Fit franchisee transfers their franchise to a new owner, the original franchisee, owners, and their spouses are still bound by the non-compete agreement for a period of two years following the transfer. This restriction aims to protect Fly To Fit's business interests by preventing former franchisees from immediately opening a competing business nearby or joining a competitor, thus leveraging the knowledge and experience gained while operating a Fly To Fit franchise.
Furthermore, the Guaranty and Non-Compete Agreement outlines similar restrictions for the guarantor. For two years after the Franchise Agreement expires or is terminated for any reason, or if applicable, for two years after a Transfer by Guarantor, the Guarantor cannot engage with any competitor within five miles of the franchisee's territory or any other Fly To Fit business. This clause ensures that individuals guaranteeing the franchisee's obligations also remain bound by non-compete terms, reinforcing the protection of Fly To Fit's market position and confidential information even after a transfer.