Can Fly Fitness operate acquired businesses within the Development Area of a Fly Fitness franchisee?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.2 Reservation of Rights.
Notwithstanding the provisions of Section 2.1 above, Developer understands and agrees that all rights to any businesses, other than as specified in this Agreement, are fully reserved to Franchisor within or outside of the Territory.
By way of example only, Franchisor reserves the rights to offer (i) other products or services not offered under the Marks, (ii) other fitness concepts under the Marks or other trademarks, and (iii) 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").
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the franchisor reserves specific rights within the development area granted to a developer. Section 2.2 states that Fly Fitness retains all rights to businesses within or outside the territory, except those specifically granted in the agreement. This means that while a developer has rights to establish Fly Fitness franchises in a defined area, Fly Fitness can still operate other businesses or fitness concepts, even under different trademarks, within that same territory.
Fly Fitness explicitly reserves the right to offer other products or services not offered under the Fly Fitness 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").
This reservation of rights has significant implications for potential Fly Fitness developers. While they are granted a development area, Fly Fitness can still introduce competing or complementary services through various channels, including alternative fitness concepts or product distribution. This could impact the developer's potential market share and revenue within their designated area. Therefore, it is crucial for prospective developers to understand the scope of these reserved rights and how they might affect their business operations and profitability. They should discuss these potential competitive scenarios with Fly Fitness during their due diligence process.