After the Punch King Fitness franchise is terminated or expires, for how long is solicitation of customers prohibited?
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 is terminated or expires, the franchisee is prohibited from soliciting customers of their former Punch King Fitness franchise for a period of 2 years. This restriction is subject to state law, meaning that the enforceability and specific terms of the non-solicitation agreement may vary depending on the laws of the state in which the franchise operates.
This non-solicitation covenant is in addition to a non-compete covenant, which prevents the franchisee from involvement in a competing business for 2 years in or within 25 miles of any Punch King Fitness location. These restrictions are designed to protect Punch King Fitness's customer base and market share, even after a franchise agreement ends.
For a prospective franchisee, this means that upon termination or expiration of the franchise agreement, they will not only be restricted from operating a competing business but also from actively seeking out customers from their former Punch King Fitness location. This could significantly impact their ability to start a new, similar business in the same area after the franchise agreement ends. It is important to understand the specific state laws regarding non-compete and non-solicitation agreements to fully grasp the implications of these restrictions.