Does the Restrictive Covenant Agreement for a Punch King Fitness franchise have a specific term or duration?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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, the Restrictive Covenant Agreement includes specific terms regarding non-competition both during the franchise agreement and after its expiration or termination.
The agreement states that during the term of the Franchise Agreement and for two years after, the franchisee (referred to as Covenantor) cannot own, operate, or have any interest in a boxing and kickboxing business (or any business offering similar products/services) within 25 miles of any Punch King Fitness franchise. This restriction does not apply if the franchisee owns less than 5% of the equity securities in a publicly traded corporation.
If the franchisee violates this non-compete provision after the Franchise Agreement ends, the period during which they must abide by the obligation will be extended to two years after they cease the violation. This clause aims to protect Punch King Fitness's market and confidential information by preventing former franchisees from directly competing using the knowledge and experience gained during their franchise term.