Can Fly Fitness purchase or affiliate with a competitive franchise network?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that Franchisor has the right, now or in the future, to purchase, merge, acquire or affiliate with an existing competitive or non-competitive franchise network, chain or any other business regardless of the location of that chain's or business' facilities, and to operate, franchise or license those businesses and/or facilities operating under the Marks or any other marks following Franchisor's purchase, merger, acquisition or affiliation, regardless of the location of the facilities (which Franchisee acknowledges may be within the Territory, proximate thereto, or proximate to any of Franchisee's locations).
However, Franchisor represents that it will not convert any such acquired facilities that are operating within the Territory to a Fly Fitness franchise during the Term of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness retains the right to purchase, merge, acquire, or affiliate with any existing competitive or non-competitive franchise network, chain, or business. This extends to operating, franchising, or licensing those businesses under their existing marks or any other marks after the purchase, merger, acquisition, or affiliation. This right is not limited by the location of the acquired entity's facilities, which may be within or near a franchisee's territory.
However, Fly Fitness makes a specific representation that it will not convert any acquired facilities operating within a franchisee's territory into a Fly Fitness franchise during the term of the Franchise Agreement. This provides a degree of territorial protection to the franchisee, ensuring that an acquired competitor within their territory will not be rebranded as a Fly Fitness outlet during the agreement's term, which is ten years.
This clause is important for prospective franchisees as it clarifies that Fly Fitness can expand through acquisitions, potentially bringing competitive businesses under its umbrella. While this could enhance the overall Fly Fitness brand and network, it also introduces the possibility of increased competition in the broader market. The assurance that acquired businesses within a franchisee's territory won't be converted to Fly Fitness franchises offers some comfort, but franchisees should still be aware of potential competitive impacts from acquired networks operating under different brands.