What is the effect of a Fly Fitness franchisee's loss of premises being due to their own default on their ability to relocate?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
You may not change the location of your Franchised Business, without our written consent, which we may withhold in our sole discretion. The conditions under which we may allow you to relocate include the following: loss of your premises not due to your default, demographics of the surrounding area, proximity to other Fly Fitness outlets, lease requirements, traffic patterns, vehicular and pedestrian access, proximity to major roads, available parking, and overall suitability. If you wish to relocate, you must identify a new location for the Franchised Business that meets our approval, in accordance with our then-current site selection procedures, within 60 days. If you do not identify a site within this time period, we may terminate the Franchise Agreement. While you are closed for relocation, you must continue to pay us a minimum Royalty and Brand Fund contribution equal to the average paid during the four (4) calendar quarters immediately preceding the loss of your premises. Should we consent to your relocation, you will be required to pay us a relocation fee equal to twenty-five percent (25%) of the then-current initial franchise fee.
Source: Item 12 — TERRITORY (FDD pages 29–31)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a franchisee's ability to relocate their Fly Fitness outlet is contingent upon the reason for the loss of their current premises. If the loss of premises is due to the franchisee's own default, it implies that Fly Fitness may not allow the franchisee to relocate. The FDD states that the conditions under which Fly Fitness may allow relocation include the loss of premises not due to the franchisee's default. This suggests that if the franchisee is at fault for losing the location, Fly Fitness is less likely to approve a relocation.
If a Fly Fitness franchisee wishes to relocate, they must identify a new location that meets Fly Fitness's approval within 60 days, following the franchisor's site selection procedures. Failure to do so may result in the termination of the Franchise Agreement. During the relocation period, the franchisee is still obligated to pay a minimum Royalty and Brand Fund contribution. This payment is calculated based on the average paid during the four calendar quarters immediately preceding the loss of the premises.
Should Fly Fitness consent to the relocation, the franchisee will be required to pay a relocation fee. This fee is equal to twenty-five percent of the then-current initial franchise fee. This financial obligation, combined with the continued Royalty and Brand Fund contributions during the closed period, represents a significant cost for franchisees seeking to relocate. The FDD emphasizes that Fly Fitness reserves the right to withhold consent for relocation at its sole discretion, adding another layer of uncertainty for franchisees.