Does the Fly Fitness agreement allow the Developer to create obligations on behalf of the Franchisor?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 11.1 Independent Licensee. Developer is and shall be an independent licensee under this Agreement, and no partnership shall exist between Developer and Franchisor. This Agreement does not constitute Developer as an agent, legal representative, or employee of Franchisor for any purpose whatsoever, and Developer is not granted any right or authority to assume or create any obligation for or on behalf of, or in the name of, or in any way to bind Franchisor. Developer agrees not to incur or contract any debt or obligation on behalf of Franchisor or commit any act, make any representation, or advertise in any manner which may adversely affect any right of Franchisor or be detrimental to Franchisor or other developers or franchisees of Franchisor. Pursuant to the above, Developer agrees to indemnify Franchisor and hold Franchisor harmless from any and all liability, loss, attorneys' fees, or damage Franchisor may suffer as a result of claims, demands, taxes, costs or judgments against Franchisor arising out of the relationship hereby established which specifically, but not exclusively, includes costs, losses, expenses, attorneys fees relative to assignment or the transfer of right to develop and transactional costs relative thereto, defaults under any leases, subleases, notes, receipt of revenues or any other relationships arising directly or indirectly out of the development and operation of the Fly Fitness outlets.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the agreement explicitly states that the Developer is an independent licensee and not an agent, legal representative, or employee of Fly Fitness. This means the Developer does not have the authority to create any obligations on behalf of Fly Fitness. The agreement specifically prohibits the Developer from assuming or creating any obligation for or on behalf of Fly Fitness, or in any way binding Fly Fitness to any agreement.
This provision protects Fly Fitness from being held liable for any debts, obligations, or actions undertaken by the Developer. It ensures that the Developer operates independently and is responsible for their own business decisions and liabilities. This is a standard practice in franchising, as franchisors typically want to maintain control over their brand and avoid being held responsible for the actions of their franchisees or developers.
The Fly Fitness agreement further reinforces this by requiring the Developer to indemnify and hold Fly Fitness harmless from any liability, loss, attorneys' fees, or damage that Fly Fitness may suffer as a result of claims arising out of the relationship established by the agreement. This includes costs related to the assignment or transfer of development rights, defaults under leases, and any other relationships arising from the development and operation of Fly Fitness outlets. This indemnification clause provides an additional layer of protection for Fly Fitness.
In practical terms, a prospective Fly Fitness developer should understand that they cannot act on behalf of Fly Fitness or create any financial or legal obligations for the franchisor. They are responsible for managing their own business and ensuring that they do not take any actions that could negatively impact Fly Fitness or its other franchisees. This independent contractor relationship is a key aspect of the Fly Fitness development agreement.