After the Punch King Fitness franchise is terminated or expires, what is the geographic scope of the non-compete agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
| Pr | ovision | Section in Franchise Agreement | Summary |
|---|---|---|---|
| p. | Your death or disability | Section XVI(E) | Must transfer to an approved 3rd party within 6 months, subject to all conditions except the transfer fee. |
| q. | Noncompetition covenants during the term of the franchise | Section XIX(A)(3) | No involvement in a competing business; cannot assist or deal with a competing business; cannot infringe on another franchisee's territorial rights. |
| r. | Noncompetition covenants after the franchise is terminated or expires | Section XIX(B) | No involvement in a competing business for 2 years in or within 25 miles of any Punch King Fitness; no solicitation of customers of your franchise for 2 years, subject to state law. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–53)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, if the franchise agreement is terminated or expires, the franchisee is subject to a non-compete covenant. This covenant restricts the franchisee from involvement in a competing business for a period of 2 years.
The geographic scope of this restriction extends to the area in or within 25 miles of any Punch King Fitness location. Additionally, the franchisee is prohibited from soliciting customers of their former franchise for 2 years, although this is subject to state law.
This means that after the franchise agreement ends, a former Punch King Fitness franchisee cannot operate or be involved with a competing fitness business within the specified radius of any Punch King Fitness location for two years. They are also restricted from actively seeking business from their previous customer base during that time, although the enforceability of customer non-solicitation clauses can vary by state.