What is the consequence if a Fly Fitness developer is dissolved?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
7.1 Default and Automatic Termination. Developer shall be deemed to be in material default under this Agreement, and all rights granted herein shall automatically terminate without notice to Developer, if any Developer shall become insolvent or makes a general
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if a developer becomes insolvent or makes a general assignment for the benefit of creditors, it constitutes a material default under the agreement. In such a case, all rights granted to the developer automatically terminate without notice. This means the developer immediately loses the right to develop Fly Fitness outlets.
This automatic termination has significant implications for a prospective Fly Fitness developer. Insolvency or assignment for creditors triggers an immediate loss of the franchise rights, potentially jeopardizing any investments made in anticipation of future development. The developer would no longer be able to operate or develop Fly Fitness businesses, and the agreement is nullified without any prior warning from Fly Fitness.
This clause is a standard protective measure for franchisors. It ensures that Fly Fitness can sever ties with developers facing financial instability, protecting the brand and the network of franchisees from potential negative impacts. Developers should carefully consider their financial capacity and risk management strategies before entering into a multi-unit development agreement with Fly Fitness, as financial distress can lead to immediate termination of their rights.