What is the relationship between the Fly Fitness Development Agreement and the Franchise Agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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NOW, THEREFORE, the parties, in consideration of the promises, undertakings and commitments of each party to the other set forth herein, and intending to be legally bound hereby, mutually agree as follows:
1. RECITATIONS. The Recitations set out above form part of this Agreement.
2. GRANT OF DEVELOPMENT RIGHTS.
- 2.1 Grant. Franchisor hereby grants to Developer, and the Developer hereby accepts from the Franchisor, on the terms and conditions set forth in this Agreement, which includes, but is not limited to, the execution of a Franchise Agreement pursuant to Section 4.1 hereof, the right to develop, construct, open and operate one Franchised Business within the Development Area set forth in Attachment 3. Developer shall be granted rights to establish additional Franchised Businessesin the Development Area, up to the total number of outlets set forth in the Mandatory Development Schedule set forth in Section 5.2 hereof, subject to Developer's full compliance with all conditions precedent to the grant of such rights outlined below, which rights shall be exercised in accordance with Section 4.1 hereof.
- 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 Development Agreement grants the developer the right to develop, construct, open, and operate Fly Fitness franchises within a specific area, contingent upon executing a Franchise Agreement. The Development Agreement itself does not grant the developer any right to operate a franchised business or use Fly Fitness's marks.
The Development Agreement outlines the terms and conditions under which Fly Fitness grants the developer the right to establish additional franchised businesses within the Development Area, up to the total number of outlets specified in the Mandatory Development Schedule. These rights are subject to the developer's full compliance with all conditions.
Upon signing the Multi-Unit Development Agreement, the developer must also execute the initial Franchise Agreement for the first franchised business. A portion of the Development Fee will be credited towards the Initial Franchise Fee due under this initial Franchise Agreement. This credit applies to each additional Franchise Agreement executed, provided the developer adheres to the Mandatory Development Schedule and is not in breach of the Development Agreement.