What constitutes unauthorized use of trademarks, copyrighted material, or confidential information that could lead to termination of the Fly Fitness franchise agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 14.5.
Infringement.
Franchisee acknowledges that any unauthorized use of the Intellectual Property shall constitute an infringement of Franchisor's or Licensor's rights in the Intellectual Property and a material event of default hereunder.
Franchisee shall provide Franchisor or Licensor with all assignments, affidavits, documents, information and assistance Franchisor or Licensor reasonably requests to fully vest in Franchisor or Licensor all such rights, title, and interest in and to the Intellectual Property, including all such items as are reasonably requested by Franchisor or Licensor to register, maintain, and enforce such rights in the Intellectual Property.
- 14.6.
Substitution.
Franchisor reserves the right to substitute different Marks for use in identifying the System and the Franchised Business, if it in its sole discretion, determines that substitution of different Marks will be beneficial to the System.
Franchisor will not be liable to Franchisee for any expenses, losses or damages sustained by Franchisee as a result of any additions, modifications, substitutions, or discontinuation of the Marks.
Franchisee covenants not to commence or join in any litigation or other proceeding against Franchisor for any of these expenses, losses, or damages.
- 14.7.
Franchisee's Use of the Intellectual Property.
With respect to Franchisee's use of the Intellectual Property pursuant to this Agreement, Franchisee further agrees that:
- 14.7.1 Unless otherwise authorized or required by Franchisor, Franchisee shall advertise the Franchised Business only under the Mark "Fly Fitness" and design.
Franchisee shall not use the Marks, or any portions, variations, or derivatives thereof, as part of its corporate or other legal name.
All fictitious names used by Franchisee shall bear the designation "a franchisee of Fly Fitness Franchise, L.L.C.".
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, unauthorized use of intellectual property constitutes an infringement of Fly Fitness's rights and a material event of default under the franchise agreement. This includes using marks, logos, copyrighted material, or confidential information without authorization. Franchisees must advertise the Franchised Business only under the mark "Fly Fitness" unless otherwise authorized. They cannot use the marks as part of their corporate or legal name, and all fictitious names must bear the designation "a franchisee of Fly Fitness Franchise, L.L.C.".
Upon termination or expiration of the Franchise Agreement, the franchisee must immediately cease operating the Franchised Business and cannot identify themselves as a Fly Fitness owner, franchisee, or licensee. They must also cease using the Marks, any imitation of any Mark, logos, copyrighted material, or other Intellectual Property, Confidential Information, or indicia of a Fly Fitness outlet. This includes stopping the use of all signs, billboards, advertising materials, displays, stationery, and forms that display the Marks.
Franchisees must also take action to cancel any assumed name registrations that contain the Mark or any other service mark or trademark of Fly Fitness. Employees of the franchisee (Covenantors) are required to maintain the confidentiality of the Confidential Information and use it only in connection with the operation of the Franchised Business. They cannot make copies of documents containing Confidential Information without Fly Fitness's permission and must surrender any material containing Confidential Information upon request or termination of employment.
Franchisees and their principals are prohibited from diverting business or customers to competitors, participating in similar fitness businesses, or employing individuals associated with Fly Fitness. These restrictions apply during the term of the agreement and for a specified period afterward, highlighting the importance of protecting Fly Fitness's intellectual property and confidential information to maintain the integrity of the franchise system.