Are the Developer's rights under the Fly Fitness Franchise Agreement considered personal?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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. Failure to transfer in accordance with the forgoing will constitute a material default and all that is granted by this Agreement will terminate. A transfer under this Section 6.6, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 6 and unless transferred by gift, devise, or inheritance, subject to the terms of Section 6.5 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 Developer's Fly Fitness outlet(s) and remaining development schedule during the six (6)-month period from its onset.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the grant of rights under the Development Agreement is personal to the Developer. Specifically, upon the death or permanent disability of the Developer, their executor, administrator, conservator, or other personal representative is required to transfer the Developer's interest in the Agreement within six months to a third party approved by Fly Fitness. Failure to transfer the interest within that time frame constitutes a material default, leading to the termination of all rights granted by the Agreement.
This transfer, including those by devise or inheritance, is subject to the standard transfer conditions outlined in Article 6 of the agreement. Unless the transfer is by gift, devise, or inheritance, it is also subject to the terms of Section 6.5, which likely involves Fly Fitness's right of first refusal. The agreement defines "permanent disability" as a mental or physical condition that prevents the Developer from providing continuous and material supervision of the Fly Fitness outlet(s) and the remaining development schedule during the six-month period following the onset of the disability.
This clause ensures that Fly Fitness maintains control over who operates and develops their franchises, even in unforeseen circumstances such as the death or disability of the original developer. It protects the brand by ensuring that a qualified and approved successor takes over the development responsibilities. For a prospective Fly Fitness developer, this means understanding the importance of having a succession plan in place and being aware that their rights under the Development Agreement are not freely transferable to just anyone.