Can Fly Fitness assign the Franchise Agreement to another entity without the franchisee's permission?
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.
Nothing contained in this Agreement shall require Franchisor to remain in the business franchised herein or to offer the same products and services, whether or not bearing the Marks, in the event that Franchisor exercises its prerogative hereunder to assign Franchisor's rights in this Agreement.
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 the franchisee's permission. Specifically, Fly Fitness can assign the agreement to any person, firm, corporation, or other entity. However, if the assignment results in the assignee performing Fly Fitness's obligations, the assignee must expressly assume and agree to perform those obligations.
Fly Fitness details specific actions it may take, including selling assets and rights to the marks and system, engaging in public or private placements of securities, merging with or acquiring other corporations (including competitors), and undertaking financial restructuring. The franchisee specifically waives any claims, demands, or damages related to the loss of association with Fly Fitness due to these actions.
This clause does not require Fly Fitness to remain in the franchised business or offer the same products and services if it assigns its rights in the agreement. This means a new owner could change the business model or offerings, which could impact the franchisee's business. Franchisees should carefully consider this clause and its potential implications for their investment and business operations.