What happens if a Fly Fitness franchisee fails to elect to extend or renew the lease?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Throughout the term of the Franchise Agreement and any renewals thereto, Assignor agrees that it shall elect and exercise all options to extend the term of or renew the Lease not less than thirty (30) days prior to the last day that the option must be exercised, unless Assignee otherwise agrees in writing.
If Assignee does not otherwise agree in writing, and upon failure of Assignor to so elect to extend or renew the Lease as aforesaid, Assignor hereby appoints Assignee as its true and lawful attorney-in-fact to exercise such extension or renewal options in the name, place, and stead of Assignor for the purpose of effecting such extension or renewal.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if a franchisee fails to elect to extend or renew their lease, Fly Fitness, as the Assignee, is appointed as the franchisee's attorney-in-fact. This means Fly Fitness has the power to act on behalf of the franchisee (Assignor) to exercise the extension or renewal options of the lease. This action is taken to ensure the lease is extended or renewed. The franchisee must elect to extend or renew the lease not less than thirty (30) days prior to the last day that the option must be exercised, unless Fly Fitness agrees otherwise in writing.
This provision is part of a Conditional Assignment of Lease agreement, where the franchisee assigns their rights and interests in the lease to Fly Fitness for collateral purposes. Fly Fitness has no liability or obligation related to the lease unless it takes possession of the premises and assumes the franchisee's obligations. This assignment ensures that Fly Fitness has a mechanism to protect its interests in the franchise location.
This clause protects Fly Fitness's investment in the location and ensures business continuity. It also places a significant responsibility on the franchisee to manage their lease diligently and communicate with Fly Fitness regarding any lease-related issues. The franchisee needs to be aware of the deadlines for exercising lease options and the potential consequences of failing to do so. Franchisees should maintain open communication with Fly Fitness regarding their intentions to renew or extend the lease to avoid any surprises or unwanted interventions.