Does the Gokhale Method agreement allow a franchisee to have any interest in a Competitive Business during the term of the agreement?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.1.3.
Own, maintain, operate, engage in, act as a consultant for, perform services for, or have any interest in any Competitive Business or offer to sell or sell any services, equipment, product or other item which is the same as, or substantially similar to, any of the services, equipment, products or other items offered by a Gokhale Method Institute location.
The prohibitions in this Section 17 shall not apply to interests in or activities performed in connection with your Franchised Business.
- 17.2.
Post-Term Covenants.
You covenant that, except as otherwise approved in writing by us, you shall not, within a 10-mile radius of your former Location or of any location then existing where the Gokhale Method is taught, and for a continuous, uninterrupted period of two (2) years following the end of our relationship with you, whether by termination, expiration or otherwise, either directly or indirectly own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in (as owner or otherwise) any Competitive Business.
A "Competitive Business" is a business that: is the same as, or substantially similar to, the Franchised Business; or that offers to sell or sells any services, equipment, products or other items which are the same as, or substantially similar to, any of the services, equipment, products or other items offered by us or our franchisees or Affiliates.
If you do not immediately comply with this paragraph upon the end of our relationship, the two-year period referred to above will commence when you begin compliance.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, franchisees are generally prohibited from owning, operating, or having any interest in a Competitive Business during the term of their agreement. A Competitive Business is defined as one that is the same as, or substantially similar to, the Gokhale Method franchised business, or that offers similar services, equipment, products, or other items. However, this restriction does not apply to interests or activities performed in connection with the franchisee's Gokhale Method Franchised Business.
This means that while operating a Gokhale Method franchise, a franchisee cannot simultaneously be involved in a competing business that offers similar posture and movement education or related products. The purpose of this restriction is to protect Gokhale Method's market position, trade secrets, and brand integrity by preventing franchisees from diverting resources or knowledge to competing ventures.
After the franchise agreement ends, a franchisee is restricted from engaging in a Competitive Business within a 10-mile radius of their former location or any existing Gokhale Method location for two years. This post-term covenant aims to further protect Gokhale Method's market share and prevent former franchisees from directly competing using the knowledge and experience gained during their franchise term. The two-year period begins when the franchisee starts complying with the non-compete terms.
It is important for prospective franchisees to understand these restrictions and how they might impact their future business endeavors. Franchisees should seek legal counsel to fully understand the implications of these covenants before entering into a franchise agreement with Gokhale Method.