Does the Fly Fitness franchise agreement include a section on 'Defaults'?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
5.2.2 Franchisee shall not have committed three (3) or more events constituting default during the then current Term of this Agreement, whether or not such defaults were cured.
12.1.5.
Engaging in such sales shall be a material default of this Agreement;
- 17.5.
In the event of a default by Franchisee, in addition to Franchisor's right to terminate the Franchise Agreement, and not in lieu thereof, Franchisor reserves the right with five (5) days' prior written notice to Franchisee to direct suppliers to stop
Upon a default by Assignor under the Lease or under the franchise agreement for a Fly Fitness outlet between Assignee and Assignor (the "Franchise Agreement"), or in the event of a default by Assignor under any document or instrument securing the Franchise Agreement, Assignee shall have the right and is hereby empowered to take possession of the Premises demised by the Lease, expel Assignor therefrom, and, in such event, Assignor shall have no further right, title or interest in the Lease.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
Yes, the Fly Fitness 2024 Franchise Disclosure Document addresses the topic of 'Defaults' within the franchise agreement, although it does not appear to have a specific section explicitly labeled as such. Item 22 discusses contracts and includes references to franchisee default and the implications of such default. For example, if a franchisee commits three or more events constituting default during the term of the agreement, regardless of whether they were cured, this can affect their ability to renew the franchise agreement.
Fly Fitness also reserves the right to direct suppliers to stop furnishing products and supplies to a franchisee in the event of a default, provided they give five days' prior written notice. The franchisee has no recourse against Fly Fitness for any losses resulting from this action. Furthermore, a franchisee's engagement in unauthorized sales activities is considered a material default of the agreement.
Additionally, if a franchisee defaults under the franchise agreement, Fly Fitness has the right to take possession of the premises and expel the franchisee. This conditional assignment of lease underscores the importance of adhering to the franchise agreement to maintain control of the business location. These stipulations highlight the importance of understanding what constitutes a default and the potential ramifications for a Fly Fitness franchisee.
Prospective franchisees should carefully review the entire Item 22 within the Fly Fitness Franchise Agreement to fully understand their obligations and the circumstances that could lead to a default. It would be prudent to seek legal counsel to clarify any ambiguities and ensure a comprehensive understanding of the default provisions.