What happens if execution is levied against a Fly Fitness developer's business or property?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
7.1 Default and Automatic Termination. Developer shall be deemed to be in material default under this Agreement, and all rights granted herein shall automatically terminate without notice to Developer, if any Developer shall become insolvent or makes a general
assignment for the benefit of creditors; or if any Developer files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof, or admits in writing his or her inability to pay debts when due; or if any Developer is adjudicated a bankrupt or insolvent in proceedings filed against any of Developer under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state; or if a bill in equity or other proceeding for the appointment of a receiver of any Developer or other custodian for Developer's business or assets is filed and consented to by any of Developer; or if a receiver or other custodian (permanent or temporary) of any Developer's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against any Developer; or if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond is filed); or if any Developer is dissolved; or if execution is levied against any of Developer's business or property; or if suit to foreclose any lien or mortgage against any of Developer's Franchised Business premises or equipment is instituted against any Developer and not dismissed within thirty (30) days.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a developer will be considered in material default of their agreement if execution is levied against any of the developer's business or property. In such a case, all rights granted to the developer under the agreement will automatically terminate without notice.
This clause protects Fly Fitness by allowing them to immediately terminate the agreement if a developer faces serious financial or legal issues that could jeopardize their ability to fulfill their obligations. The automatic termination clause means Fly Fitness does not need to provide a warning or opportunity to cure the default, which is a stringent measure.
For a prospective Fly Fitness developer, this highlights the importance of maintaining sound financial standing and managing their business responsibly. Any legal judgments or financial levies could lead to the immediate loss of their development rights. This underscores the risk involved in developing multiple franchise locations, as financial troubles in one area can impact the entire development agreement.