What is the exception to the loss of possession rule for Fly Fitness franchisees?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon termination or expiration of this Agreement, all rights and licenses granted hereunder to Franchisee shall immediately terminate and Franchisee and each Principal, if any, shall:
18.1.1. immediately cease to operate the Franchised Business, and shall not thereafter, directly, or indirectly identify himself, herself or itself as a Fly Fitness owner, franchisee, or licensee;
18.1.2. immediately and permanently (i) cease to use the Marks, any imitation of any Mark, logos, copyrighted material, or other Intellectual Property, Confidential Information, other confidential or proprietary material or indicia of a Fly Fitness outlet, (ii) cease to use any trade name, trade or service mark or other commercial symbol that suggests a current or past association with Franchisor, Franchisor's affiliates, or the System and (iii) de-identify the Franchised Business premises.
In particular, Franchisee shall cease to use, without limitation, all signs, billboards, advertising materials, displays, stationery, forms, and any other articles, which display the Marks;
18.1.3. take such action as may be necessary to cancel any assumed name or equivalent registration that contains the Mark or any other service mark or trademark of Franchisor, and Franchisee shall furnish Franchisor with evidence of compliance with this obligation which is satisfactory to Franchisor, within five (5) days after termination or expiration of this Agreement;
18.1.4. promptly pay all sums owing to Franchisor and its affiliates.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, there is no mention of an exception to the loss of possession rule for franchisees. The document outlines the obligations of the franchisee upon termination or expiration of the agreement, which include ceasing operation of the franchised business and discontinuing the use of Fly Fitness's intellectual property.
Specifically, upon termination or expiration of the Franchise Agreement, the franchisee must immediately cease operating the Fly Fitness business and cannot identify themselves as a Fly Fitness owner, franchisee, or licensee. They must also stop using Fly Fitness's trademarks, logos, copyrighted material, and any other confidential information associated with the brand. This includes removing all signs, advertising materials, and stationery that display the Fly Fitness marks.
Furthermore, the franchisee is required to take necessary actions to cancel any assumed name registrations that contain Fly Fitness's trademarks and provide evidence of compliance to the franchisor within five days of termination or expiration. All outstanding payments to Fly Fitness and its affiliates must also be promptly settled.
Since the FDD does not provide an exception to the loss of possession rule, it is important for a prospective franchisee to seek clarification from Fly Fitness regarding any potential circumstances under which they might be allowed to continue operating under the brand or retain possession of the business after the agreement's termination or expiration. This information is crucial for understanding the full scope of the franchisee's obligations and rights.