Can the Fly Fitness franchisor withhold acceptance of the Operating Principal?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2.
Restrictions on Transfers by Franchisee.
Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee.
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval.
Franchisor may void any transfer made without such approval.
- 16.3.
Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business, or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the franchisor's approval is required for any transfer of rights and duties under the Franchise Agreement. The agreement is personal to the franchisee and the principals of the business, based on the franchisor's assessment of their character, skills, business ability, and financial capacity.
Thus, franchisees cannot directly or indirectly sell, assign, transfer, or encumber the agreement, the franchise, the franchised business, or any assets without the prior written consent of Fly Fitness. The franchisor may void any transfer made without such approval. This restriction ensures that Fly Fitness maintains control over who operates its franchises and protects the brand's reputation.
This policy has significant implications for prospective franchisees. It means that if a franchisee wishes to sell their business or transfer ownership, they must obtain Fly Fitness's approval. Fly Fitness has the right to refuse a transfer if they do not believe the proposed transferee meets their standards. This could limit the franchisee's ability to exit the business or realize the full value of their investment. Therefore, it is crucial for potential franchisees to understand these transfer restrictions and carefully consider their long-term plans before entering into a franchise agreement with Fly Fitness.