What is the geographic scope of a Fly Fitness franchisee's territory?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Closeouts Sample Non Disclosure Sample
ITEM 12: TERRITORY
Under the Franchise Agreement, you have the right to establish and operate one (1) Fly Fitness outlet within a territory (the "Territory"). You are required to find and obtain possession of a specific location in your Territory for your Franchised Business that meets our site selection standards and our approval. Your Territory is located in all or a portion of a listed town, city, or county, and is identified by a group of contiguous zip codes. The Territory is determined on an individual basis taking into account area demographics and population density. The minimum Territory granted is an area with a minimum population of approximately 20,000. Your Territory will be defined and attached to your Franchise Agreement as Attachment 2. If you do not yet have a location at the signing of the 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.
Unless you have entered into a Multi-Unit Development Agreement, we may, but have no obligation to, consider granting to you the right to establish additional Fly Fitness outlets under other franchise agreements if you are in compliance with the Franchise Agreement and propose to open another Fly Fitness outlet in an area and at a location we approve. The Franchise Agreement grants you no options, rights of first refusal or similar rights to acquire additional franchises.
We reserve all rights not expressly granted in the Franchise Agreement. For example, we or our affiliates may own, operate, or authorize others to own or operate Fly Fitness outlets outside of the Territory and may operate other kinds of businesses within the Territory.
Source: Item 12 — TERRITORY (FDD pages 29–31)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a franchisee is granted the right to establish and operate one Fly Fitness outlet within a defined territory. This territory is specified in Attachment 2 of the Franchise Agreement and is typically a portion of a town, city, or county, identified by contiguous zip codes. The territory size is determined based on area demographics and population density, with a minimum population of approximately 20,000 people. While Fly Fitness grants a limited protected territory, it is not exclusive. This means a franchisee may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Fly Fitness.
Fly Fitness retains the right to sell products and services under its trademarks within the franchisee's territory through alternative distribution channels such as retail outlets, captive market locations (airports, malls), and the internet. Franchisees will not receive compensation for these sales made through alternative channels within their territory. Franchisees are restricted to soliciting sales only from customers within their designated territory and are prohibited from using alternative distribution channels to make sales outside of it. However, Fly Fitness will include the franchisee's outlet location on its website.
Fly Fitness also maintains the right to establish additional Fly Fitness outlets under other franchise agreements if a franchisee is compliant with their existing agreement and proposes to open another outlet in an approved area and location. The Franchise Agreement does not grant franchisees any exclusive rights or first refusal rights to acquire additional franchises. Fly Fitness reserves all rights not expressly granted in the Franchise Agreement, including the right to operate or authorize others to operate Fly Fitness outlets outside of the franchisee's territory and to operate other kinds of businesses within the territory. This includes the possibility of merging with or acquiring a competitive business, although Fly Fitness states they will not convert any acquired business in the franchisee's territory to a Fly Fitness franchise during the term of the Franchise Agreement.