What is the effect of the expiration or termination of a Fly Fitness Multi-Unit Development Agreement on Fly Fitness's ability to open other outlets?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of your Multi-Unit
Development Agreement, provided that you are not in default of your Agreement or development schedule, we will not open another Fly Fitness outlet or grant the right to anyone else to open a Fly Fitness outlet within your development area until the expiration or sooner termination of your Multi-Unit Development Agreement. However, notwithstanding this limited protection right we grant to you, we reserve all rights to sell our products and services under the Mark in the development area through alternative distribution channels, as discussed below.
Source: Item 12 — TERRITORY (FDD pages 29–31)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the expiration or termination of a Multi-Unit Development Agreement allows Fly Fitness to open other outlets or grant the right to others to open Fly Fitness outlets within the former development area. During the term of a Multi-Unit Development Agreement, Fly Fitness agrees not to open or grant the right to open another Fly Fitness outlet in the franchisee's development area, provided the franchisee is not in default of the agreement or development schedule. This protection ends upon the expiration or termination of the agreement.
This means that a franchisee with a Multi-Unit Development Agreement has a limited period of protection from direct competition from other franchised Fly Fitness outlets within their designated development area. However, this protection is contingent on the franchisee remaining in compliance with the agreement and adhering to the development schedule. Once the agreement expires or is terminated, Fly Fitness regains the freedom to expand within that area, potentially leading to increased competition for the former multi-unit franchisee.
It is important to note that even during the term of the Multi-Unit Development Agreement, Fly Fitness retains the right to sell products and services under its marks within the development area through alternative distribution channels. These alternative channels could include retail outlets, captive market locations, and the internet. Franchisees receive no compensation for sales made through these alternative channels, so prospective franchisees should consider the potential impact of these alternative distribution channels on their business.
Prospective franchisees should carefully consider the terms and duration of the Multi-Unit Development Agreement, as well as the potential for competition from alternative distribution channels, when evaluating the Fly Fitness franchise opportunity. Understanding these factors is crucial for making an informed decision about investing in a Fly Fitness franchise.