What remedies are available to Punch King Fitness in the event of a breach of the Restrictive Covenant Agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Covenantor expressly covenants that he/she shall not, directly or indirectly, commit an act of infringement or contest, or aid in contesting, the validity or ownership of the Marks or take any other action in derogation thereof during the term of the Franchise Agreement or after the expiration or termination thereof pledges that his/her violation of any of the covenants contained in this Agreement would result in irreparable injury to Franchisor and Franchisee, for which no adequate remedy at law may be available, and accordingly consents to the issuance of, and agrees to pay all court costs and reasonable attorney fees incurred by Franchisor or Franchisee in obtaining, an injunction enjoining any conduct by Covenantor prohibited by the terms of this Agreement. This remedy shall be in addition to any and all other remedies that may be available to Franchisor or Franchisee.
- **3.
Non-competition**.
Covenantor covenants that, during the term of the Franchise Agreement and for a continuous and uninterrupted period commencing upon the expiration or termination of the Franchise Agreement (regardless of the cause for termination) and continuing for two (2) years thereafter, directly or indirectly, for him/herself or through, on behalf of, or in conjunction with any person, entity or organization, own, maintain, operate, engage in, or have any interest in, any business offering boxing and kickboxing or any other products or services that have been offered by the Franchised Business, within twenty-five (25) miles of any Punch King Fitness Franchised Business.
This restriction shall not apply to the beneficial ownership by Covenantor of less than five percent (5%) of the outstanding equity securities of any corporation whose securities are registered under the Securities and Exchange Act of 1934.
In the event of the violation of this provision following expiration, termination, or assignment of the Franchise Agreement, the period of time Covenantor shall be required to abide by the breached obligation shall be extended to a period of two (2) years after Covenantor 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, if a franchisee (referred to as 'Covenantor' in this agreement) violates the Restrictive Covenant Agreement, Punch King Fitness and the franchisee may pursue several remedies. The agreement acknowledges that any violation would cause irreparable injury for which there may be no adequate remedy at law. As such, Punch King Fitness is entitled to seek an injunction against the franchisee to stop the prohibited conduct. The franchisee (Covenantor) also agrees to cover all court costs and reasonable attorney fees that Punch King Fitness or another franchisee incurs while obtaining the injunction.
This remedy is in addition to any other remedies that Punch King Fitness or the franchisee may have available. Specifically, the Restrictive Covenant Agreement states that for a period of two years after the termination or expiration of the Franchise Agreement, the franchisee cannot engage in a competitive business within 25 miles of any Punch King Fitness franchise. A competitive business is defined as one offering boxing and kickboxing or similar services.
If the franchisee violates this non-compete provision after the Franchise Agreement ends, the period during which the franchisee must comply with the obligation will be extended to two years after the franchisee stops breaching the agreement. However, the restriction does not apply if the franchisee owns less than 5% of the equity securities in a corporation registered under the Securities and Exchange Act of 1934.