Can Fly Fitness affiliates own or operate Fly Fitness outlets outside of a franchisee's territory?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
nts you no options, rights of first refusal or similar rights to acquire additional franchises.
We reserve all rights not expressly granted in the Franchise Agreement. For example, we or our affiliates may own, operate, or authorize others to own or operate Fly Fitness outlets outside of the Territory and may operate other kinds of businesses within the Territory. Although we do not currently do so and have no plans to do so, we and our affiliates may own, acquire, conduct, or authorize others to conduct, any form of business at any location selling any type of product or service not offered under the Marks, including a product or service similar to those you will sell at your Franchised Business. We reserve the right to merge with, acquire, or be acquired by, an existing competitive or non-competitive franchise network, chain, or other business; however, we will not convert any acquired business in your Territory to a franchise using our primary trademarks during the Term of your Franchise Agreement.
We and our affiliates may sell products and services under the Marks within or outside the Territory or development area through any method of distribution other than a dedicated Fly Fitness outlet location, such as distribution through retail outlets, including but not limited to, grocery stores; in captive market locations, such as airports and malls; and the Internet ("Alternative Distribution Channels").
Source: Item 12 — TERRITORY (FDD pages 29–31)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness or its affiliates have the right to own, operate, or authorize others to own or operate Fly Fitness outlets outside of a franchisee's designated territory. This means that while a franchisee is granted a territory, Fly Fitness retains the ability to expand its brand's presence outside of that territory through company-owned or affiliated outlets. This is a fairly standard practice in franchising, allowing the franchisor to grow the brand strategically.
Fly Fitness also reserves the right to sell products and services under the Fly Fitness marks within or outside the franchisee's territory through alternative distribution channels. These alternative channels include retail outlets like grocery stores, captive market locations such as airports and malls, and the internet. The franchisee will not receive any compensation for sales made through these alternative distribution channels, even if they occur within the franchisee's territory.
Furthermore, the Franchise Agreement does not grant franchisees any rights to participate in franchises, licensing programs, or other business proposals related to the sale and distribution of Fly Fitness products or services through these alternative distribution channels. This clarifies that the franchisee's rights are limited to operating a physical Fly Fitness outlet within their territory, and they have no claim to sales or distribution through other means, even within their territory. This is an important consideration for prospective franchisees, as it highlights the limitations on their territory rights and the potential for competition from other channels controlled by Fly Fitness.