What is the effect of a transfer of a Pump It Up franchise on the non-compete obligations?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) Following the effective date of the Transfer:
(a) you and your transferring owners agree not to engage in any of the activities proscribed Section 18.B. below, for a period of 2 years, beginning on the effective date of the Transfer; and
(b) you and your transferring owners will not use any Mark, any colorable imitation of a Mark, or other indicia of a Pump It Up Business in any manner or for any purpose; or utilize for any purpose any trade name, trade or service mark, or other commercial symbol that suggests or indicates a connection or association with us.
These restrictions also apply after Transfers, as provided in Section 16.B.(3) above.
- (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.
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.
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, following the effective date of a franchise transfer, the transferring franchisee and their owners agree not to engage in activities prohibited in Section 18.B for two years. This period begins on the transfer's effective date. They also cannot use any Pump It Up marks or anything that suggests an association with Pump It Up.
These restrictions also apply after transfers, as detailed in Section 16.B.(3). The restrictions outlined in Section 18.B include not diverting or attempting to divert any actual or potential business, employee, agent, or customer of any Pump It Up Business to a competing business.
During what Pump It Up defines as the "Restrictive Period", these restrictions 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. If there is noncompliance with these obligations, the period of noncompliance will not be credited toward fulfilling the obligations under Section 18.B.
However, owning less than 2% of a Competing Business whose stock is publicly traded on a recognized United States stock exchange will not violate these restrictions. If any restriction is deemed unenforceable, it will be enforced to the fullest extent permissible under the law.