During the term of the Punch King Fitness Franchise Agreement, what is the duration of the non-solicitation covenant after the agreement's expiration or termination?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee further covenants that, except as otherwise approved in writing by Franchisor, Franchisee shall not, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation:
- 1. 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, own, maintain, operate, engage in, or have any interest in any business offering boxing and kickboxing, or any other services that had been offered by the Franchised Business, within twenty-five (25) miles of any Punch King Fitness Franchised Business; or
- 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, both the franchisee and any key personnel who sign a covenant agreement are subject to a non-solicitation covenant for a period following the termination or expiration of the franchise agreement. Specifically, for a period of two years after the agreement ends, the franchisee cannot directly or indirectly solicit or perform services for anyone who was a client of the Punch King Fitness franchise during the term of the agreement. This restriction applies regardless of the reason for the termination. This obligation survives the termination, expiration, or cancellation of the Franchise Agreement.
This means that after a Punch King Fitness franchise agreement ends, the former franchisee is restricted from actively seeking out or providing services to clients they served during their time as a franchisee. This is designed to protect the goodwill and customer base that Punch King Fitness has established. The non-solicitation clause prevents a former franchisee from leveraging their existing relationships with clients to start a competing business or join another similar business in the immediate aftermath of their franchise agreement.
Furthermore, if the franchisee violates this non-solicitation provision after the agreement terminates, 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 clause is intended to strongly discourage any violation of the non-solicitation agreement, as any breach will prolong the period of restriction.
This type of clause is fairly standard in franchise agreements across various industries. It aims to protect the franchisor's brand and customer relationships. Prospective Punch King Fitness franchisees should understand this restriction and factor it into their plans should they decide to exit the franchise system, as it could impact their ability to work in a similar business or serve their former clients for a defined period.