Does the Fly Fitness franchisee have to be notified before Fly Fitness assigns the agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor shall have the right to assign this Agreement, and all of Franchisor's rights and privileges hereunder, to any person, firm, corporation, or other entity, without Franchisee's permission or prior knowledge, provided that, with respect to any assignment resulting in the subsequent performance by the assignee of Franchisor's obligations, the assignee shall expressly assume and agree to perform Franchisor's obligations hereunder.
Specifically, and without limitation to the foregoing, Franchisee expressly affirms and agrees that Franchisor may: (i) sell Franchisor's assets and Franchisor's rights to the Marks and the System outright to a third party; (ii) engage in a public or private placement of some or all of Franchisor's securities; (iii) merge, acquire other corporations, or be acquired by another corporation, including competitors; (iv) undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and (v) with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or relating to the loss of association with or identification of Franchisor.
Nothing contained in this Agreement shall require Franchisor to remain in the business franchised herein or to offer the same products and services, whether or not bearing the Marks, in the event that Franchisor exercises its prerogative hereunder to assign Franchisor's rights in this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness has the right to assign the Franchise Agreement to another entity without needing the franchisee's permission or prior knowledge. However, if the assignment results in the new entity performing Fly Fitness's obligations under the agreement, that entity must expressly agree to fulfill those obligations.
This means that Fly Fitness can sell its assets, rights to its trademarks, or the entire franchise system to a third party without the franchisee's consent. Fly Fitness can also engage in activities like public or private placements of securities, mergers, acquisitions, or financial restructuring without requiring the franchisee's approval. The franchisee also waives any claims related to the loss of association with Fly Fitness due to these changes.
This clause gives Fly Fitness significant flexibility in managing and potentially changing its business structure. For a potential franchisee, this highlights the risk that the original franchisor they contracted with could be replaced by a new entity with different priorities or management styles. It is important for franchisees to understand that Fly Fitness is not obligated to remain in the fitness business or offer the same products and services if it assigns its rights.