What is the definition of 'Restrictive Period' in the Pump It Up franchise agreement?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) For purposes of this Agreement, the term "Restrictive Period" shall be two years from the date the Franchise Agreement expires or is terminated; provided however, that if a court determines that such period is unenforceable, the Restrictive Period shall end one year from the date the Franchise Agreement expires or is terminated; provided however, that if a court determines that such period is unenforceable, the Restrictive Period shall end six months from the date the Franchise Agreement expires or is terminate.
(4) During the term of this Agreement, there is no geographical limitation on the restrictions contained in this Section 18.B.
During the Restrictive Period, these restrictions will apply at the Premises; 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 on the later of: (i) the date of the termination or expiration of this Agreement; or (ii) the date on which all persons restricted by Section 18.B. begin to comply with Section 18.B.
- (5) If, at any time during the Restrictive Period, you or your owners fail to comply with your obligations contained in this Section 18.B., that period of noncompliance will not be credited toward the satisfaction of your obligations under this Section 18.B.
These restrictions also apply after Transfers, as provided in Section 16.B.(3) above.
Equity ownership of less than 2% of a Competing Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this Section 18.B.
- (6) If any restriction in this Section 18.B. is deemed unenforceable by virtue of its scope in terms of area, business activity prohibited, and/or length of time, but would be enforceable if modified, you and we agree that the covenant will be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction whose law determines the covenant's validity.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the 'Restrictive Period' is defined as the period during which certain restrictions apply to the franchisee after the franchise agreement expires or is terminated. The standard Restrictive Period for Pump It Up is two years from the date of expiration or termination. However, this period may be shortened if a court deems the two-year period unenforceable. In such cases, the Restrictive Period will be reduced to one year, or even six months if the one-year period is also deemed unenforceable.
During the Restrictive Period, the franchisee is subject to specific limitations regarding business activities. These restrictions apply at the physical location of the franchise (the Premises), within a 5-mile radius of the outer boundaries of the Protected Area granted to the franchisee, and within 5 miles of any other Pump It Up location that is either operational or under construction. These geographical restrictions are measured from the later of either the date of termination/expiration or the date when all restricted parties begin complying with the terms of Section 18.B of the agreement.
It's important to note that any period of noncompliance with these obligations during the Restrictive Period will not count towards fulfilling the obligations. This means that if a franchisee violates the restrictions, the clock does not run, and the obligations remain in effect for the full duration of the Restrictive Period. Furthermore, these restrictions remain in effect even after a transfer of ownership, as outlined in Section 16.B.(3) of the franchise agreement. An exception exists for equity ownership of less than 2% in a publicly traded Competing Business on a recognized United States stock exchange, which is not considered a violation of these restrictions.
Finally, the Pump It Up franchise agreement includes a clause addressing the potential unenforceability of any restriction within Section 18.B. If a court finds a restriction too broad in terms of area, prohibited business activity, or time length, the agreement stipulates that the covenant will be enforced to the fullest extent permissible under the laws and public policies of the relevant jurisdiction. This ensures that the restrictions are applied as broadly as legally possible to protect Pump It Up's interests.