What happens if the Fly Fitness franchisee's representative fails to transfer the interest in the Franchise Agreement within the specified timeframe after death or permanent disability?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ter the offer is given to Franchisor or (ii) there is any material change in the terms of the offer, the offer will again be subject to Franchisor's right of first refusal.
- 16.7. Death or Permanent Disability. The grant of rights under this Agreement is personal to Franchisee, and on the death or permanent disability of Franchisee or any of Franchisee's Principals, the executor, administrator, conservator or other personal representative of Franchisee or Principal, as the case may be, shall be required to transfer Franchisee's or Principal's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor. Failure to transfer in accordance with the forgoing will constitute a material default and the Franchise granted by this Agreement will terminate. A transfer under this Section 16.7, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 16 and unless transferred by gift, devise, or inheritance, subject to the terms of Section 16.6 above. For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Franchisee's Franchised Business during the six (6)-month period from its onset.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if the franchisee or their principal dies or becomes permanently disabled, their representative has six months to transfer the interest in the Franchise Agreement to a third party approved by Fly Fitness. Permanent disability is defined as a mental or physical condition that prevents the person from continuously supervising the Fly Fitness franchise during that six-month period. During this time, an interim successor manager satisfactory to Fly Fitness must supervise the business, or Fly Fitness may provide interim management.
However, if the representative fails to transfer the interest within that six-month timeframe, it constitutes a material default of the Franchise Agreement. As a result, the franchise granted by the agreement will be terminated.
This clause highlights the importance of succession planning for Fly Fitness franchisees. Franchisees should consider these implications and discuss with Fly Fitness how they can ensure a smooth transition in the event of death or permanent disability, to avoid losing the franchise.