Can Fly Fitness assign the agreement to any entity without the franchisee's prior knowledge?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor shall have the right to assign this Agreement, and all of Franchisor's rights and privileges hereunder, to any person, firm, corporation, or other entity, without Franchisee's permission or prior knowledge, provided that, with respect to any assignment resulting in the subsequent performance by the assignee of Franchisor's obligations, the assignee shall expressly assume and agree to perform Franchisor's obligations hereunder.
Specifically, and without limitation to the foregoing, Franchisee expressly affirms and agrees that Franchisor may: (i) sell Franchisor's assets and Franchisor's rights to the Marks and the System outright to a third party; (ii) engage in a public or private placement of some or all of Franchisor's securities; (iii) merge, acquire other corporations, or be acquired by another corporation, including competitors; (iv) undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and (v) with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or relating to the loss of association with or identification of Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness has the right to assign the Franchise Agreement to another entity without needing the franchisee's permission or even informing them beforehand. However, there is a condition attached to this right. If the assignment results in the new entity taking over Fly Fitness's obligations under the agreement, that entity must expressly agree to fulfill those obligations.
This means that Fly Fitness can sell its assets, rights to its trademarks, or even merge with or be acquired by another company without the franchisee's consent. Fly Fitness can also engage in financial restructuring. The franchisee waives any claims related to loss of association with Fly Fitness as a result of these actions.
For a prospective franchisee, this clause signifies that the future of the Fly Fitness franchise system and their relationship with it could change without their direct input or prior notification. While the assignee must take on Fly Fitness's obligations, the franchisee should consider the potential implications of dealing with a completely new entity, potentially with different priorities or management styles. It is a fairly standard practice in franchising for the franchisor to retain the right to assign the agreement, as it allows for business flexibility and potential growth opportunities for the franchise system.