Can Fly Fitness purchase a competitive franchise network?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
6.1.1 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 Developer'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, Developer 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,
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness has the right to merge with, acquire other corporations, or be acquired by another corporation, including competitors. This means Fly Fitness can purchase a competitive franchise network. This action can occur without the developer's permission or prior knowledge. However, if the acquisition results in the assignee performing Fly Fitness's obligations, the assignee must expressly assume and agree to perform those obligations.
This clause protects Fly Fitness by allowing it to grow through acquisition. It also ensures that if Fly Fitness is acquired, the new entity is obligated to uphold Fly Fitness's responsibilities under the franchise agreement.
For a prospective franchisee, this means the Fly Fitness brand could evolve through mergers or acquisitions. While Fly Fitness can be acquired by a competitor, the agreement stipulates that the obligations to the franchisee must be maintained by the acquiring company.