What is the duration of the restriction on Developer and Principals from owning, maintaining, or operating a competing business to Goldfish Swim School after the expiration or termination of the agreement?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
er; and (ii) access to such training, trade secrets and the Confidential Information is a primary reason for their execution of this Agreement. In consideration thereof, Developer and each Principal covenant that, during the Term and for a period of two (2) years after the expiration or termination hereof, neither Developer nor any Principal shall, directly or indirectly:
- (a) own, maintain, operate or have any interest in any Competing Business;
- (b) own, maintain, operate or have any interest in any Competing Business which business is, or is intended to be, located in the Territory; or
- (c) own, maintain, operate or have any interest in any Competing Business which business is, or is intended to be, located within a twenty five (25) mile radius of any Swim school which is a part of a concept or System owned, operated, or franchised by us or any Affiliate.
- (4) Sections 7.C.(3)(b), and (c) and shall not apply to an interest for investment only of five percent (5%) or less of the capital stock of a Publicly-Held Entity provided, however, that such owner is not a director, officer ,or manager of, or consultant to such Publicly-Held Entity or to businesses operated pursuant to a Franchise Agreement with us.
- D. Each of the foregoing covenants is independent of each other covenant or agreement contained in this Agreement or in any Franchise Agreement.
- E. We may, in our sole discretion, reduce the area, duration or scope of any covenant contained in Section 7.C.
Source: Item 22 — CONTRACTS (FDD pages 76–77)
What This Means (2025 FDD)
According to the 2025 Goldfish Swim School Franchise Disclosure Document, both the Developer and each Principal are subject to a non-compete covenant for a period of two years following the expiration or termination of the Area Development Agreement. During this two-year period, the Developer and Principals are restricted from directly or indirectly owning, maintaining, operating, or having any interest in a Competing Business.
The restrictions extend not only to any Competing Business, but also to any Competing Business located or intended to be located within the Territory granted to the developer. Furthermore, the non-compete also applies to any Competing Business located or intended to be located within a 25-mile radius of any Goldfish Swim School, or a swim school that is part of a concept or system owned, operated, or franchised by Goldfish Swim School or its affiliates.
However, there is an exception to these restrictions. The non-compete clauses do not apply to an investment of five percent or less of the capital stock of a Publicly-Held Entity, provided that the owner is not a director, officer, manager, or consultant to the Publicly-Held Entity or to businesses operated under a franchise agreement with Goldfish Swim School. Goldfish Swim School also retains the right to reduce the area, duration, or scope of any covenant contained in Section 7.C., without the Developer's or any Principal's consent, effective upon notice to the Developer, and the Developer and each Principal must comply with any covenant as modified.