What is the geographic scope of the non-compete restrictions during the Restrictive Period for a Pump It Up franchise?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, during the Restrictive Period, the non-compete restrictions apply at the franchise's 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. The start date for these restrictions is the later of either the termination/expiration date of the Franchise Agreement or the date on which all persons restricted by Section 18.B begin to comply with Section 18.B.
The Restrictive Period is defined as two years from the date the Franchise Agreement expires or is terminated. However, this period may be reduced to one year or even six months if a court deems the initial two-year period unenforceable. This flexibility ensures that the non-compete terms are as enforceable as possible under applicable laws.
These restrictions also apply after Transfers, as provided in Section 16.B.(3). 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. 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.
It is important for prospective Pump It Up franchisees to understand these geographic and temporal restrictions, as they could significantly impact their ability to engage in similar business ventures after the franchise agreement ends. Franchisees should seek legal counsel to fully understand the implications of these non-compete clauses in their specific jurisdiction.