What constitutes a material default regarding the transfer of a Fly Fitness franchise interest after death or permanent disability?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Death or Permanent Disability.
The grant of rights under this Agreement is personal to Franchisee, and on the death or permanent disability of Franchisee or any of Franchisee's Principals, the executor, administrator, conservator or other personal representative of Franchisee or Principal, as the case may be, shall be required to transfer Franchisee's or Principal's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor.
Failure to transfer in accordance with the forgoing will constitute a material default and the Franchise granted by this Agreement will terminate.
A transfer under this Section 16.7, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 16 and unless transferred by gift, devise, or inheritance, subject to the terms of Section 16.6 above.
For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Franchisee's Franchised Business during the six (6)-month period from its onset.
Immediately after the death or permanent disability ofsuch person, or while the Franchise is owned by an executor, administrator, guardian, personal representative or trustee of that person, the Franchised Business shall be supervised by an interim successor manager satisfactory to Franchisor, or Franchisor, in its sole discretion, may provide interim management pursuant to and on the terms of Section 11.3.3 hereof, pending transfer of the Franchise to the deceased or disabled individual's lawful heirs or successors.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if the executor, administrator, conservator, or other personal representative of the franchisee or their principals fails to transfer the franchise interest within six months of the date of death or permanent disability to a third party approved by Fly Fitness, it will constitute a material default.
For Fly Fitness, permanent disability is defined as a mental or physical condition that is reasonably expected to prevent or actually prevents the person from providing continuous and material supervision of the franchise's operation during the six-month period from its onset. This means that the franchisee or their principals must be actively involved in overseeing the business unless they are demonstrably unable to do so due to a disability.
Following the death or permanent disability, Fly Fitness requires the franchise to be supervised by an interim successor manager satisfactory to them, or Fly Fitness may provide interim management at their discretion, until the franchise is transferred to the deceased or disabled individual's lawful heirs or successors. This ensures the continuity of the business during the transition period. The transfer itself is subject to the standard transfer conditions outlined in the franchise agreement.