What must a Fly Fitness Developer do to ensure the Development Agreement does not terminate early?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ch transfer is subject to Franchisor 's prior written approval pursuant to Section 6.3 hereof. However, if (i) the sale to the transferee is not completed within one hundred twenty (120) days after the offer is given to Franchisor or (ii) there is any material change in the terms of the offer, the offer will again be subject to Franchisor's right of first refusal.
- 6.6 Death or Permanent Disability. The grant of rights under this Agreement is personal to Developer, and on the death or permanent disability of Developer, the executor, administrator, conservator, or other personal representative of Developer shall be required to transfer Developer's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a Developer must avoid certain actions to prevent early termination of the Development Agreement. The Developer must not become insolvent or make a general assignment for the benefit of creditors, as either of these events will result in automatic termination without notice. Additionally, in the event of death or permanent disability, the Developer's interest in the agreement must be transferred within six months to a Franchisor-approved third party. Failure to do so constitutes a material default leading to termination.
To maintain the agreement, the Developer must also comply with the Mandatory Development Schedule, which outlines the timeline for opening Fly Fitness locations within the designated Development Area. Compliance with this schedule is crucial for retaining the rights to establish additional Franchised Businesses. Furthermore, the Developer must adhere to the conditions for transferring interests in the agreement as detailed in Article 6, including obtaining Franchisor approval for any transfer.
These stipulations are designed to protect Fly Fitness's interests and ensure the orderly development of its franchise system. By adhering to the development schedule, maintaining financial solvency, and properly managing any transfer of ownership, a Fly Fitness Developer can avoid default and ensure the continuation of their Development Agreement.