If Fly Fitness assigns the Franchise Agreement, what must the assignee do regarding Fly Fitness's obligations?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor shall have the right to assign this Agreement, and all of Franchisor's rights and privileges hereunder, to any person, firm, corporation, or other entity, without Franchisee's permission or prior knowledge, provided that, with respect to any assignment resulting in the subsequent performance by the assignee of Franchisor's obligations, the assignee shall expressly assume and agree to perform Franchisor's obligations hereunder.
Specifically, and without limitation to the foregoing, Franchisee expressly affirms and agrees that Franchisor may: (i) sell Franchisor's assets and Franchisor's rights to the Marks and the System outright to a third party; (ii) engage in a public or private placement of some or all of Franchisor's securities; (iii) merge, acquire other corporations, or be acquired by another corporation, including competitors; (iv) undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and (v) with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or relating to the loss of association with or identification of Franchisor.
Nothing contained in this Agreement shall require Franchisor to remain in the business franchised herein or to offer the same products and services, whether or not bearing the Marks, in the event that Franchisor exercises its prerogative hereunder to assign Franchisor's rights in this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if Fly Fitness assigns the Franchise Agreement, the assignee must expressly assume and agree to perform Fly Fitness's obligations under the agreement. This means that the entity taking over the agreement from Fly Fitness is legally bound to fulfill all the responsibilities and duties that Fly Fitness originally had.
This requirement protects the franchisee by ensuring that the terms and conditions of the franchise agreement remain in effect even if the ownership or control of Fly Fitness changes. The franchisee can expect the same level of support, services, and adherence to the agreement as they would have received from the original franchisor. This provision aims to provide stability and continuity in the franchise relationship.
However, the FDD also states that Fly Fitness is not required to remain in the fitness business or offer the same products and services after assigning its rights in the agreement. This could potentially lead to changes in the brand, services, or overall direction of the franchise, which may impact the franchisee's business. Prospective franchisees should carefully consider this possibility and evaluate the potential implications of such changes on their investment and business operations.