What constitutes a violation of the non-solicitation agreement for Punch King Fitness franchisees?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee further covenants that, except as otherwise approved in writing by Franchisor, Franchisee shall not, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation:
- 1. for a continuous and uninterrupted period commencing upon the expiration or termination of this Agreement (regardless of the cause for termination) and continuing for two (2) years thereafter, own, maintain, operate, engage in, or have any interest in any business offering boxing and kickboxing, or any other services that had been offered by the Franchised Business, within twenty-five (25) miles of any Punch King Fitness Franchised Business; or
- 2. for a continuous and uninterrupted period commencing upon the expiration or termination of this Agreement (regardless of the cause for termination) and continuing for two (2) years thereafter, directly or indirectly solicit or perform services for any person who was a client of the Franchised Business at any time during the term of this Agreement.
- 3. Franchisee and Franchisor agree that the covenants contained in this Section shall survive the expiration, termination, or cancellation of this Agreement. In the event of the violation of this Section by Franchisee following expiration, termination, or assignment of this Agreement, the period of time Franchisee shall be required to abide by the breached obligation shall be extended to a period of two (2)
years after Franchisee is no longer in breach of such obligation.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, franchisees are bound by non-solicitation covenants both during the term of the Franchise Agreement and after its termination. During the agreement, a franchisee violates the non-solicitation agreement if they divert or attempt to divert business or clients of the Franchised Business or any other Punch King Fitness franchisee to any competitor through direct or indirect means. Additionally, owning, maintaining, engaging in, or having any interest in a Competitive Business, which offers boxing, kickboxing, or any services offered in the Franchised Business, without written consent from Punch King Fitness is a violation.
After the termination or expiration of the Franchise Agreement, the franchisee is further restricted. For two years following termination, the franchisee cannot own, maintain, operate, engage in, or have any interest in a business offering boxing, kickboxing, or any services previously offered by the Franchised Business within 25 miles of any Punch King Fitness Franchised Business. Furthermore, for two years post-termination, the franchisee is prohibited from directly or indirectly soliciting or performing services for anyone who was a client of the Franchised Business during the term of the agreement.
These covenants survive the expiration, termination, or cancellation of the Franchise Agreement. If a franchisee violates these post-termination restrictions, the period they are required to abide by the breached obligation is extended by two years from the date they cease the violating activity. This means that any breach essentially restarts the clock on the non-compete and non-solicitation period, ensuring Punch King Fitness's interests are protected even after a franchisee leaves the system.
It is important for prospective Punch King Fitness franchisees to understand these restrictions, as violations can lead to legal action and financial penalties. The franchisor can seek injunctions and recover court costs and attorney fees, in addition to other available remedies. Franchisees should carefully consider these limitations before entering into a franchise agreement, as they significantly impact their ability to operate a similar business or solicit clients after leaving the Punch King Fitness system.