What obligation does a Pump It Up franchisee have to prevent the diversion of business to 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, franchisees are prohibited from diverting business away from any Pump It Up location to a competing business, both during the term of the Franchise Agreement and for a specified period after its expiration or termination. This restriction applies to any actual or potential business, employee, agent, or customer. 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.
Specifically, franchisees (and their owners) cannot own, operate, engage in, franchise, license, advise, help, make loans to, or have any direct or indirect interest in a Competing Business. They are also barred from performing services for a Competing Business as a partner, director, officer, manager, employee, consultant, representative, or agent. This restriction is in place to protect Pump It Up's confidential information, system, and the investments made in developing the brand.
The restriction period, termed the "Restrictive Period," lasts for two years following the expiration or termination of the Franchise Agreement. However, this period may be reduced to one year or even six months if a court deems the initial two-year period unenforceable. During both the term of the agreement and the Restrictive Period, there is generally no geographical limitation on these restrictions. However, during the Restrictive Period, the 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.