What is the process for Fly Fitness to terminate the agreement if a curable default occurs?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.3 Curable Defaults.
Developer shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, if Developer fails to cure the default within the time period set forth in this Section 7.3, effective immediately upon notice to Developer, if Developer:
7.3.1 fails to pay when due any amounts due to Franchisor under this Agreement or any related agreement and does not correct the failure within five (5) days after written notice; provided, however, Franchisor has no obligation to give written notice of a late payment more than two (2) times in any twelve (12)–month period, and the third such late payment in any twelve (12)–month period shall be a non-curable default under Section 7.2;
7.3.2 fails to perform any non-monetary obligation imposed by this Agreement (excepting those defaults of obligations set forth in Sections 7.1 and 7.2 for which there is no opportunity to cure) and such default shall continue for five (5) days after Franchisor has given written notice of such default, or if the default cannot be reasonably corrected within said five (5)-day period, then if it is not corrected within such additional time as may be reasonably required assuming Developer proceeds diligently to cure; provided, however, Franchisor has no obligation to give written notice of a non-monetary default more than two (2) times in any twelve (12)–month period, and the third such default, whether monetary or non-monetary, in any twelve (12) – month period shall be a non-curable default under Section 7.2.
7.4 Post-Termination Obligations.
Upon termination or expiration of this Agreement, all rights and licenses granted hereunder to Developer shall immediately terminate and Developer shall (i) immediately cease all development operations pursuant to this Agreement; and (ii) comply with the non-disclosure and non-competition covenants contained in Article 8.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if a franchisee has a curable default, Fly Fitness may terminate the agreement if the franchisee fails to correct the default within the specified time frame. If the default involves failing to pay amounts due to Fly Fitness, the franchisee has five days after written notice to correct the failure. However, Fly Fitness is only obligated to provide written notice for late payments twice in a 12-month period; a third late payment within that period constitutes a non-curable default.
For non-monetary defaults, the franchisee also has five days after written notice to correct the issue. If the default cannot be reasonably corrected within five days, the franchisee has additional time as reasonably required, assuming they are diligently working to resolve it. Similar to monetary defaults, Fly Fitness is only required to give written notice for non-monetary defaults twice in a 12-month period, with a third default (whether monetary or non-monetary) becoming a non-curable default.
Upon termination of the agreement, all rights granted to the franchisee immediately cease, and the franchisee must stop all development operations. Additionally, the franchisee must comply with the non-disclosure and non-competition covenants outlined in the agreement, which restrict their ability to engage in competitive business activities within a certain area and timeframe after termination.