What is the definition of 'permanent disability' in the Fly Fitness franchise agreement?

According to Fly Fitness's 2024 Franchise Disclosure Document, a 'permanent disability' is defined within the context of the franchise agreement as a mental or physical disability, impairment, or condition. This condition must be reasonably expected to prevent, or actually prevent, the individual in question from providing continuous and material supervision of the Fly Fitness franchise's operations. This period of inability to supervise must last for at least six months from the onset of the disability.

This definition is important because, in the event of a franchisee's or a principal's death or permanent disability, the agreement requires the interest in the franchise to be transferred within six months to a third party approved by Fly Fitness. Failure to do so constitutes a material default, potentially leading to the termination of the franchise agreement. This clause ensures that the Fly Fitness business continues to operate under suitable management even if the original franchisee is incapacitated.

To maintain continuity during such unforeseen circumstances, Fly Fitness mandates that an interim successor manager, satisfactory to Fly Fitness, supervises the franchised business immediately after the death or permanent disability. Alternatively, Fly Fitness, at its discretion, may provide interim management while the franchise is being transferred to the deceased or disabled individual's lawful heirs or successors. This highlights the importance of having a succession plan in place and understanding the implications of a principal's inability to manage the franchise.

This clause is fairly standard in franchise agreements, as franchisors typically want to ensure the continued operation and brand consistency of their franchises. Prospective Fly Fitness franchisees should carefully consider this provision and discuss with Fly Fitness what would be considered an acceptable interim successor manager and what support the franchisor would provide during such a transition.