What agreements must a Fly Fitness developer be in full compliance with?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
loper, and the Developer hereby accepts from the Franchisor, on the terms and conditions set forth in this Agreement, which includes, but is not limited to, the execution of a Franchise Agreement pursuant to Section 4.1 hereof, the right to develop, construct, open and operate one Franchised Business within the Development Area set forth in Attachment 3. Developer shall be granted rights to establish additional Franchised Businessesin the Development Area, up to the total number of outlets set forth in the Mandatory Development Schedule set forth in Section 5.2 hereof, subject to Developer's full compliance with all conditions precedent to the grant of such rights outlined below, which rights shall be exercised in accordance with Section 4.1 hereof.
- 2.2 Reservation of Rights. Notwithstanding the provisions of Section 2.1 above, Developer understands and agrees that all rights to any businesses, other than as specified in this Agreement, are fully reserved to Franchisor within or outside of the Territory. By way of example only, Franchisor reserves the rights to offer (i) other products or services not offered under the Marks, (ii) other fitness concepts under the Marks or other trademarks, and (iii) services and products through any channel in the Territory other than a dedicated Fly Fitness outlet, such as to schools, camps, institutional/professional campuses, and conferences; distribution of products through retail outlets, including but not limited to, grocery, health and fitness outlets; and the Internet ("Alternate Distribution Channels").
- 2.3 No License to System and Marks. Developer expressly acknowledges that this Agreement is not a Franchise Agreement and does not grant to Developer any right or license to operate a Franchised Business, distribute any product or service, or use the Marks. This Agreement sets forth conditions which, if fully satisfied, confer upon Developer the rights to enter a Franchise Agreement with Franchisor to establish one or more Franchised Businesses in the Development Area only. Developer's rights to open and operate a Franchised Business and use the System and Marks shall be derived only through the execution of a Franchise Agreement for each Franchised Business to be established in the Development Area.
- 3. TERM. Unless sooner terminated in accordance with this Agreement, the term of this Agreement and all rights granted by Franchisor under this Agreement shall expire on the date on which Developer successfully and in a timely manner has complied with all of Developer's obligations hereunder and has completed the development obligations in accordance with the Development Schedule.
**4.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a developer must maintain full compliance with all conditions precedent to the grant of rights to establish additional Franchised Businesses in the Development Area, up to the total number of outlets set forth in the Mandatory Development Schedule. These rights are exercised in accordance with Section 4.1 of the agreement.
Compliance with the Mandatory Development Schedule is crucial for a Fly Fitness developer. Failure to meet the schedule or any other breach of the agreement can prevent the developer from receiving the applicable credit from the Development Fee, which is applied to the Initial Franchise Fee payable pursuant to each additional Franchise Agreement. This fee is $50,000 for the first Fly Fitness Franchised Business and fifty percent (50%) of the discounted initial franchise fee of Twenty Five Thousand Dollars ($25,000) for each Franchised Business thereafter.
Furthermore, the agreement specifies that contemporaneous with the execution of the Multi-Unit Development Agreement, the developer must execute the initial Franchise Agreement for the first Franchised Business. This indicates that the developer's obligations begin immediately upon signing the agreement, emphasizing the importance of understanding and adhering to all terms and conditions from the outset. Upon Franchisor's approval, Developer may enter into the initial Franchise Agreement or any subsequent Franchise Agreement as required under this Agreement using a newly formed entity, such as a limited liability company, corporation or partnership, for the sole purpose of entering into a Franchise Agreement and operating the Franchised Business pursuant thereto, provided that Developer shall also personally sign such Franchise Agreement as a principal.