What are the consequences if a Fly To Fit franchisee violates the non-compete agreement?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- (c) Interpretation. The parties agree that each of the foregoing covenants is independent of any other covenant or provision of this Agreement. If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any arbitrator or court, then the parties intend that the arbitrator or court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Fly To Fit Franchise. Franchisee agrees that the existence of any claim it may have against Fly To Fit Franchise shall not constitute a defense to the enforcement by Fly To Fit Franchise of the covenants of this Section. If a Restricted Party fails to comply with the obligations under this Section during the restrictive period, then the restrictive period will be extended an additional day for each day of noncompliance.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, if a franchisee or their guarantor fails to comply with the obligations under the non-compete agreement during the restrictive period, the restrictive period will be extended. The extension will be for an additional day for each day of noncompliance. This means that any violation of the non-compete terms directly adds to the length of time the franchisee is bound by those restrictions.
The non-compete agreement for Fly To Fit has two components: one during the term of the agreement and another post-term. During the term, the franchisee, any owner, or their spouse cannot have any interest in, lend money to, provide services to, or be employed by a competitor. After the agreement expires or is terminated, this restriction continues for two years within five miles of the franchisee's territory or any other Fly To Fit business. If the territory isn't determined before termination, the non-competition area becomes the Development Area and the territory of any other Fly To Fit business operating at the time of termination.
Fly To Fit also requires a Guaranty and Non-Compete Agreement to be signed by anyone owning an equity interest in the franchisee. This agreement contains similar non-compete clauses that mirror those in the Franchise Agreement, applying both during the term and for two years post-term within a five-mile radius. The guarantor faces the same penalty of extending the restrictive period by one day for each day of noncompliance.
These measures are designed to protect Fly To Fit's business interests by preventing franchisees and related parties from using the brand's confidential information and operational knowledge to compete, either during the franchise term or shortly after its conclusion. Prospective franchisees should carefully consider these restrictions and their potential impact on future business opportunities.