What happens to obligations pertaining to non-competition after the termination of a Fly To Fit franchise agreement?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
13.2 Covenants Not to Compete.
(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. 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.
(b) Restriction Post Term.
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), Guarantor shall not 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 located 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 the Franchise Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Fly To Fit business operating on the date of termination.
- (c) Interpretation.
Guarantor agrees that each of the foregoing covenants is independent of any other covenant or provision of this Guaranty or the Franchise Agreement.
If all or any portion of the covenants in this Section is held to be unenforceable or unreasonable by any court or arbitrator, then the parties intend that the court or arbitrator modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Fly To Fit Franchise.
Guarantor agrees that the existence of any claim it or Franchisee 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 Guarantor 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, obligations pertaining to non-competition remain in effect after the termination or expiration of the Franchise Agreement. Specifically, for two years after the agreement expires or is terminated for any reason, the franchisee, any owner, or any spouse of an owner cannot have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by any competitor. This restriction applies 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. If the agreement is terminated before the territory is determined, the non-competition area will be the Development Area and the territory of any other Fly To Fit business operating on the date of termination.
This non-compete agreement is also applicable to any Guarantor of the Franchise Agreement. For two years after the Franchise Agreement expires or is terminated, the Guarantor cannot engage with any competitor within five miles of the franchisee's territory or any other Fly To Fit business. This obligation extends to ownership, lending, providing services, or employment. The terms are similar to those placed on the franchisee and owners, ensuring a broad protection of Fly To Fit's business interests.
These covenants are independent of any other agreement. Should any part of the non-compete agreement be deemed unenforceable, the parties intend for a court or arbitrator to modify the restriction to protect Fly To Fit's business interests. Furthermore, any claim the franchisee may have against Fly To Fit does not serve as a defense against the enforcement of the non-compete agreement. Non-compliance with these obligations results in an extension of the restrictive period by one day for each day of non-compliance, reinforcing the importance of adhering to the terms of the agreement.