What is the consequence of a Fly Fitness franchisee engaging in unauthorized sales?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee is expressly prohibited from selling products or services using the Franchised Business operations, assets and/or premises (i) that are not a part of the Fly Fitness System or that are not approved by Franchisor, (ii) outside of the Franchised Business premises (excluding promotional and sales events in the Territory with Franchisor's prior approval), (iii) on the internet (provided that Franchisee may conduct classregistration and payment online through Franchisor's approved platform(s)), or (iv) to dealers and/or distributors for subsequent re-sale.
Engaging in such sales shall be a material default of this Agreement;
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a franchisee engaging in unauthorized sales is in material default of the Franchise Agreement. Unauthorized sales include selling products or services (i) that are not part of the Fly Fitness System or approved by Fly Fitness, (ii) outside of the franchised business premises (with exceptions for approved promotional events), (iii) on the internet (except through approved platforms for class registration and payment), or (iv) to dealers or distributors for resale.
This means that a Fly Fitness franchisee must adhere strictly to the approved sales channels and product/service offerings defined by Fly Fitness. Deviating from these standards, even if the franchisee believes it could increase revenue, constitutes a breach of contract.
The designation of unauthorized sales as a 'material default' is significant. It gives Fly Fitness stronger grounds for taking action against the franchisee, up to and including termination of the franchise agreement. Prospective franchisees should carefully review the permitted sales activities and product/service offerings to ensure they align with their business plans and expectations, as any deviation could jeopardize their investment.