What must an assignee of the Fly Fitness Franchise Agreement do to assume the Franchisor's obligations?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
6.1.1 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 Developer'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, Developer 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, Developer 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 23 — RECEIPT (FDD pages 45–182)
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 or prior knowledge. However, for the assignee to perform Fly Fitness's obligations under the agreement, the assignee must expressly assume and agree to perform those obligations. This means the new entity taking over the franchisor's role must legally commit to fulfilling all the duties and responsibilities that Fly Fitness had under the original agreement.
This provision protects the franchisee in the event of a transfer. It ensures that the franchisee's rights and the franchisor's obligations remain intact even if the business changes ownership. Fly Fitness retains the right to sell its assets, securities, or merge with or acquire other corporations. The franchisee waives any claims, demands, or damages arising from the loss of association with Fly Fitness in such cases.
This is a fairly standard clause in franchise agreements. It allows Fly Fitness flexibility in structuring its business and planning for succession or potential sale. However, it also provides some assurance to the franchisee that the core obligations of the franchise agreement will continue to be met by whoever controls the Fly Fitness brand.