What is the restriction on the Developer and Principals regarding involvement in a Competing Business within a 25-mile radius of any Goldfish Swim School after the agreement expires or terminates?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer and each Principal acknowledge that (i) such training, trade secrets and the Confidential Information (a) are essential to the development of the Swim school and (b) provide a competitive advantage to Developer; 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. without Developer's or any Principal's consent, effective upon notice to Developer.
Developer and each Principal shall comply with any covenant as so modified.
Source: Item 22 — CONTRACTS (FDD pages 76–77)
What This Means (2025 FDD)
According to Goldfish Swim School's 2025 Franchise Disclosure Document, both the Developer and each Principal are subject to certain restrictions regarding involvement in a Competing Business, both during the term of the agreement and for a period of time after the agreement expires or terminates. Specifically, for two years after the expiration or termination of the agreement, the Developer and each Principal are prohibited from owning, maintaining, operating, or having any interest in a Competing Business that is located within a twenty-five (25) mile radius of any Goldfish Swim School. This includes any swim school that is part of a concept or system owned, operated, or franchised by Goldfish Swim School or its affiliates.
This restriction is put in place because Goldfish Swim School provides valuable, unique training, trade secrets, and confidential information to the Developer and Principals. This information is considered beyond the present skills, experience, and knowledge of the Developer, any Principal, and the Developer's employees. The franchisor considers this training, trade secrets, and confidential information essential to the development of the swim school and believes it provides a competitive advantage to the Developer.
However, there is an exception to this restriction. The restrictions outlined in sections 7.C.(3)(b) and (c) do not apply to an interest for investment only of five percent (5%) or less of the capital stock of a Publicly-Held Entity. This exception is conditional, requiring that the 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 Goldfish Swim School.
Goldfish Swim School also retains the right to modify these restrictions. The franchisor may, in its sole discretion, 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. The Developer and each Principal must comply with any covenant as modified.