Does the non-solicitation covenant in the Punch King Fitness agreement survive the expiration, termination, or cancellation of the agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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)
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the non-solicitation covenant does indeed survive the expiration, termination, or cancellation of the franchise agreement. Specifically, the agreement states that the franchisee and franchisor agree that the covenants within that section of the agreement will remain in effect even after the agreement ends, regardless of the reason for termination or cancellation. This ensures that certain obligations and restrictions continue to bind the franchisee even after the formal relationship concludes.
This survival clause has significant implications for a prospective Punch King Fitness franchisee. It means that even after the franchise term ends, the franchisee is still bound by certain restrictions, such as non-solicitation and non-competition clauses. For example, the franchisee cannot solicit clients of the Franchised Business for a period of two years after the agreement's expiration or termination. This is a common practice in franchising to protect the brand and the existing network of franchisees.
Furthermore, if a franchisee violates the non-solicitation covenant after the agreement expires or is terminated, the period during which they must comply with the obligation will be extended. The extension lasts for two years after the franchisee ceases to be in breach of the obligation. This provision serves as a strong deterrent against violating the terms of the agreement and protects Punch King Fitness's interests and the interests of its other franchisees. Franchisees should be fully aware of these post-termination obligations before entering into the agreement.