What constitutes a default under the lease for a Fly Fitness location that could lead to termination?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon a default by Assignor under the Lease or under the franchise agreement for a Fly Fitness outlet between Assignee and Assignor (the "Franchise Agreement"), or in the event of a default by Assignor under any document or instrument securing the Franchise Agreement, Assignee shall have the right and is hereby empowered to take possession of the Premises demised by the Lease, expel Assignor therefrom, and, in such event, Assignor shall have no further right, title or interest in the Lease.
Assignor agrees that it will not suffer or permit any surrender, termination, amendment, or modification of the Lease without the prior written consent of Assignee.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a default by the franchisee (referred to as "Assignor" in the lease assignment) under the lease agreement for their Fly Fitness outlet can lead to the termination of their rights to the premises. Specifically, if the franchisee defaults on the lease or under the franchise agreement with Fly Fitness, or defaults under any document securing the Franchise Agreement, Fly Fitness has the right to take possession of the premises. In such cases, the franchisee loses all rights to the lease. This assignment of lease is for collateral purposes, meaning Fly Fitness typically has no obligations related to the lease unless they take possession of the property.
This provision is outlined in the Conditional Assignment of Lease, which essentially gives Fly Fitness the power to step in and take over the lease if the franchisee fails to meet their obligations. This protects Fly Fitness's interest in maintaining a viable franchise location. The franchisee is also prohibited from making any changes to the lease (surrender, termination, amendment, or modification) without Fly Fitness's written consent, ensuring that the terms of the lease remain consistent and in good standing.
Furthermore, the landlord agrees to notify Fly Fitness of any franchisee defaults and allows Fly Fitness the right, but not the obligation, to cure any default within 30 days. If Fly Fitness takes possession and assumes the lease, the landlord agrees to recognize them as the tenant, provided Fly Fitness cures any non-monetary defaults within the 30-day period. Fly Fitness also has the right to further assign the lease to another party reasonably acceptable to the landlord, after which Fly Fitness will have no further liability under the lease.