What happens if there is a material change in the terms of the offer after it is given to Fly Fitness?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
6.5.4 If Franchisor does not exercise its right to buy within thirty (30) days, Developer may thereafter transfer the interest to the transferee on terms no more favorable than those disclosed to Franchisor, provided that such transfer is subject to Franchisor 's prior written approval pursuant to Section 6.3 hereof. However, if (i) the sale to the transferee is not completed within one hundred twenty (120) days after 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.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if a Fly Fitness developer wishes to transfer their interest in the agreement and the terms of the offer change materially after Fly Fitness receives the initial offer, the offer is again subject to Fly Fitness's right of first refusal. This means that Fly Fitness has the option to reassess the new offer and decide whether to purchase the developer's interest under the revised terms.
This provision protects Fly Fitness by ensuring they have the opportunity to maintain control over who becomes a developer within their system and under what conditions. If a developer finds a potential buyer, Fly Fitness has the first chance to buy the developer's interest themselves. This is a common clause in franchise agreements, allowing franchisors to control who enters their system.
For a prospective Fly Fitness franchisee, this means that if they later decide to sell their development rights, they cannot simply accept any offer. They must first present the offer to Fly Fitness, and if the terms of that offer change significantly during the process, Fly Fitness's right of first refusal is reinstated. This could potentially delay or complicate the sale of the franchise development rights.