Can a Fly Fitness franchisee face competition from outlets that Fly Fitness owns?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
he Franchise Agreement, you will receive a non-exclusive site search area list as Attachment 2.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
During the term of your Franchise Agreement, and provided that you are not in default of your Franchise Agreement, we will not open another Fly Fitness outlet or grant the right to anyone else to open a Fly Fitness outlet within the Territory. However, notwithstanding this limited protection right we grant to you, we reserve all rights to sell our products and services under the Marks in the Territory through alternative distribution channels, as discussed below. There is no minimum sales requirement, market penetration, or other contingency that will affect your limited protected right to operate in the Territory during the term of your Franchise Agreement, unless you are in default of your obligations to us.
You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. 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.
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 may face competition from various sources, including outlets that Fly Fitness owns. While Fly Fitness grants a limited protected territory, it is not an exclusive territory. This means that during the term of the Franchise Agreement, provided the franchisee is not in default, Fly Fitness will not open another Fly Fitness outlet or grant the right to anyone else to open one within the franchisee's territory. However, Fly Fitness retains the right to sell its products and services under its trademarks within the territory through alternative distribution channels.
Fly Fitness also reserves the right to operate or authorize others to operate Fly Fitness outlets outside of the franchisee's territory. Furthermore, Fly Fitness and its affiliates may own, acquire, conduct, or authorize others to conduct any form of business at any location selling any type of product or service not offered under the Marks, even if it is similar to those offered at the franchised business. Fly Fitness also reserves the right to merge with, acquire, or be acquired by an existing competitive or non-competitive franchise network, chain, or other business, but they will not convert any acquired business in the franchisee's territory to a franchise using their primary trademarks during the term of the Franchise Agreement.
Fly Fitness and its affiliates can also sell products and services under the Marks within or outside the territory through alternative distribution channels, such as retail outlets, grocery stores, captive market locations like airports and malls, and the Internet. The franchisee will not receive any compensation for sales made through these alternative distribution channels within their territory. The Franchise Agreement does not grant the franchisee any right to participate in franchises, licensing programs, or other business proposals for the sale and distribution of Fly Fitness products or services through these alternative channels.