After the Fly Fitness agreement expires or terminates, does the arbitration provision remain in effect?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 10.3.3 This arbitration provision is self-executing and will remain in full force and effect after expiration or termination of this Agreement. Any arbitration will be conducted on an individual, and not a class-wide or multiple plaintiffs, basis. If either party fails to appear at any properly noticed arbitration proceeding, an award may be entered against the party by default or otherwise, notwithstanding the failure to appear. Judgment upon an arbitration award may be entered in any court having jurisdiction and will be binding, final and not subject to appeal. No punitive or exemplary damages will be awarded against Franchisor, Developer, or entities related to either of them, in an arbitration proceeding or otherwise, and are hereby waived.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the arbitration provision within the franchise agreement remains in full effect even after the agreement's expiration or termination. This means that any disputes arising between Fly Fitness and the developer (franchisee) will still be subject to arbitration, as outlined in the agreement, regardless of whether the franchise agreement is still active.
This continuation of the arbitration provision is significant for a prospective Fly Fitness franchisee because it dictates how disputes will be resolved even after the business relationship concludes. Franchisees should be aware that they cannot pursue litigation for matters covered by the arbitration agreement after the franchise term ends. This includes disputes related to the franchise agreement itself, its attachments, or any alleged breaches.
The FDD specifies that the arbitration will be conducted on an individual basis, meaning class-action lawsuits are not permitted. The location of arbitration hearings will be in the State of Nebraska, or at the American Arbitration Association offices, unless Fly Fitness elects to hold it in the county where the franchisee's principal place of business is located. Furthermore, the agreement explicitly waives the awarding of punitive or exemplary damages against either party in any arbitration proceeding.
It is important to note that certain claims are exempt from the arbitration requirement, such as Fly Fitness's claims for injunctive relief, disputes arising from antitrust laws, disputes related to trademark ownership, and enforcement of the franchisee's post-termination obligations, including non-competition covenants. Franchisees should carefully review these exceptions to understand the full scope of the arbitration provision and its limitations.