Does the Pump It Up franchise agreement prevent franchisees from maintaining a competing business?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) You acknowledge and agree that: (a) pursuant to this Agreement, you will have access to the Confidential Information; (b) the System and the opportunities, associations and experience established by us and acquired by you under this Agreement are of substantial and material value; (c) in developing the System, we and our affiliates have made and continue to make substantial investments of time, technical and commercial research, and money; (d) we would be unable to adequately protect the System and the Confidential Information against unauthorized use or disclosure and would be unable to adequately encourage a free exchange of ideas and information among Pump It Up Businesses if our franchisees were permitted to hold interests in "Competing Businesses" (which are defined as (1) children's entertainment centers, or (2) recreation or entertainment businesses whose method of operation or trade dress is similar to that employed in the System); and (e) restrictions on your right to hold interests in, or perform services for, Competing Businesses will not be a hindrance to you. You and your owners
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, franchisees are restricted from engaging in competing businesses during the term of the Franchise Agreement and for a specified period after its expiration or termination. A "Competing Business" is defined as (1) children's entertainment centers, or (2) recreation or entertainment businesses whose method of operation or trade dress is similar to that employed in the Pump It Up system. This restriction applies to the franchisee and their owners, preventing them from owning, operating, or having any interest in a Competing Business, or from diverting any business, employee, or customer of Pump It Up to a Competing Business.
The "Restrictive Period" extends for two years following the expiration or termination of the Franchise Agreement. However, this period may be reduced to one year or six months if a court deems the initial two-year period unenforceable. During the term of the agreement, there are no geographical limitations on these restrictions. After the agreement ends, the restrictions apply at the premises, within a 5-mile radius of the Protected Area, and within 5 miles of any other Pump It Up location.
Notably, the addendum for Washington franchisees states that Section 18.B of the Franchise Agreement, which contains these non-compete provisions, does not apply in Washington. Furthermore, holding less than 2% equity ownership in a publicly traded Competing Business is not considered a violation of these restrictions. These non-compete clauses are designed to protect Pump It Up's confidential information, system standards, and market position by preventing franchisees from using their knowledge and resources to benefit competing ventures, except in Washington state.