What is considered 'Outside Territory Activity' for a Punch King Fitness franchisee?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee may not and is not granted the right to use other channels of distribution, such as the internet, catalog sales, telemarketing, or other direct marketing, to make sales outside of your Territory or operate using other Model Concepts unless we give you written consent to serve another specified area where no other Punch King Fitness franchise or company-owned unit is located. Franchisee acknowledges and agrees to obtain the prior written consent of Franchisor before advertising, offering, or selling beyond the aforementioned grant herein. If Franchisee is granted consent to service another specified area, Franchisee covenants and agrees to be obligated to pay royalty fees and other fees to Franchisor for the services performed or products sold.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, a franchisee is restricted from using alternative distribution methods like the internet, catalog sales, or telemarketing to make sales outside of their designated territory. Operating under different business models is also prohibited without written consent from Punch King Fitness. To engage in business activities beyond the assigned territory, a franchisee must obtain prior written consent from Punch King Fitness. If consent is granted, the franchisee is obligated to pay royalty fees and other fees to Punch King Fitness for services performed or products sold in the additional area.
Punch King Fitness retains specific rights not explicitly granted to the franchisee. These include the right to operate or license others to operate similar businesses outside the franchisee's territory, acquire competitive businesses, and establish alternative Punch King Fitness business models, such as virtual or mobile outlets, both within and outside the territory. Punch King Fitness also reserves the right to sell services and products through various channels, including internet sites and co-branding strategies.
Furthermore, Punch King Fitness, its affiliates, or other franchisees and licensees can advertise and sell goods or services using Punch King Fitness's trademarks over the internet or any other electronic network. This means that while a franchisee is restricted from actively targeting customers outside their territory through certain channels without consent, Punch King Fitness and others in the system can engage in broader marketing activities that may reach customers in any territory. This could potentially lead to overlap or competition from online sales or marketing efforts by Punch King Fitness itself or other franchisees.
In essence, 'Outside Territory Activity' for a Punch King Fitness franchisee encompasses any sales or operational activities conducted outside the specific geographic area defined in the Franchise Agreement, particularly through channels like internet sales, catalog sales, or telemarketing, without explicit written permission from Punch King Fitness. Franchisees need to be aware of these restrictions and the potential for Punch King Fitness and other franchisees to engage in broader marketing activities that could impact their territory.