If a court finds the non-compete covenants unreasonable, what is the intention of Fly To Fit?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
rritory 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.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, if a court or arbitrator finds any portion of the non-compete covenants to be unenforceable or unreasonable, the intention is for the court or arbitrator to modify the restriction. The modification should be to the extent reasonably necessary to protect the legitimate business interests of Fly To Fit Franchise. This applies both to the franchisee and any guarantor who has signed a non-compete agreement.
This means that Fly To Fit aims to have the non-compete agreement adjusted to a level that is legally acceptable while still safeguarding their business interests. It does not mean the non-compete is automatically voided; instead, it should be revised to a more reasonable scope. This could involve changes to the geographic area or the duration of the restriction.
For a prospective franchisee, this indicates that the non-compete is taken seriously by Fly To Fit, but there is also a degree of flexibility built-in. If a franchisee feels the non-compete is overly restrictive, there is potential for a court or arbitrator to modify it. However, the franchisee should be prepared to argue their case and demonstrate why the existing terms are unreasonable. The final decision rests with the court or arbitrator, who will balance the interests of both the franchisee and Fly To Fit.