Does the Pump It Up agreement prevent franchisees from helping or advising a competing business?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) You agree that, during the term of this Agreement and for the "Restrictive Period" (defined below) following the expiration or earlier termination of this Agreement, you and your owners, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with, any person, firm, partnership, corporation, limited liability company, or other entity, will not:
(a) own, maintain, operate, engage in, franchise or license, advise, help, make loans to, or have any direct or indirect controlling or non-controlling interest as an owner (whether of record, beneficially, or otherwise) or be or perform services as a partner, director, officer, manager, employee, consultant, representative, or agent in any Competing Business; or
(b) divert or attempt to divert, by direct or indirect inducement or otherwise, any actual or potential business, employee, agent or customer of any Pump It Up Business to a Competing Business.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the franchise agreement places restrictions on a franchisee's involvement with competing businesses, both during the term of the agreement and for a specified period afterward. The agreement explicitly prohibits franchisees and their owners from advising or helping a competing business, either directly or indirectly. A "Competing Business" is defined as children's entertainment centers or recreation/entertainment businesses with similar operations or trade dress to the Pump It Up system. This restriction is in place to protect Pump It Up's confidential information and the integrity of its system.
The restrictions extend for a "Restrictive Period" of two years following the expiration or termination of the franchise agreement. This period may be shortened to one year or six months if a court deems the initial two-year period unenforceable. During both the term of the agreement and the restrictive period, franchisees are prevented from owning, operating, engaging in, franchising, licensing, advising, helping, or making loans to any Competing Business. They are also prohibited from holding any direct or indirect interest in a Competing Business or performing services for one as a partner, director, officer, manager, employee, consultant, representative, or agent.
These restrictions apply without geographical limitation during the term of the agreement. During the Restrictive Period, the restrictions apply at the premises of the Pump It Up franchise, within a 5-mile radius of the outer boundaries of the Protected Area, and within 5 miles of any other Pump It Up Business in operation or under construction. The agreement clarifies that non-compliance with these obligations during the Restrictive Period will not count towards fulfilling the obligations. An exception is made for equity ownership of less than 2% in a publicly traded Competing Business. If any restriction is deemed unenforceable, the agreement states that it should be enforced to the fullest extent permissible under applicable laws.