Can Fly Fitness operate acquired businesses under different marks?

According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness has the right to purchase, merge, acquire, or affiliate with existing competitive or non-competitive franchise networks or other businesses. Following such actions, Fly Fitness can operate, franchise, or license these businesses and/or facilities under the Fly Fitness marks or any other marks. This applies regardless of the location of the acquired facilities, even if they are within or near a franchisee's territory. However, Fly Fitness represents that it will not convert any such acquired facilities operating within the franchisee's territory to a Fly Fitness franchise during the term of the agreement. This clause ensures Fly Fitness retains flexibility in expanding its business through acquisitions while providing some territorial protection to franchisees.

This provision is significant for prospective franchisees as it clarifies the scope of Fly Fitness's expansion rights. While franchisees are granted a specific territory, Fly Fitness reserves the right to grow through acquisitions, potentially operating other fitness concepts under different brands within or near the franchisee's territory. This could introduce competition, although Fly Fitness commits not to convert acquired facilities within the franchisee's territory into Fly Fitness franchises during the agreement term, which is typically ten years.

Fly Fitness also retains the right to offer other products or services not offered under the Marks, other fitness concepts under the Marks or other trademarks, and services and products through any channel in the Territory other than a dedicated Fly Fitness outlet, such as to schools, camps, institutional/professional campuses, and conferences; distribution of products through retail outlets, including but not limited to, grocery, health and fitness outlets; and the Internet ("Alternate Distribution Channels"). Franchisee will receive no compensation for Franchisor's sales through Alternate Distribution Channels made within the Territory. Franchisee agrees that such implementation of Franchisor's rights pursuant to this Section 3.2 is deemed not to impair or injure Franchisee's rights pursuant to Section 2 hereof. Franchisees should consider the potential impact of these reserved rights on their business and revenue projections.

In summary, while Fly Fitness franchisees receive a defined territory, Fly Fitness maintains broad rights to expand through acquisitions and alternative distribution channels, potentially introducing other brands or services into the market. Prospective franchisees should carefully evaluate these terms and consider how they might affect their business operations and profitability.