Does Fly Fitness require prior written approval for any transfer of the franchise?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval.
Franchisor may void any transfer made without such approval.
- 16.3.
Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business, or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees must obtain prior written approval from Fly Fitness for any transfer of the franchise. The FDD states that the rights and duties under the Franchise Agreement are personal to the franchisee and the principals of the business as they exist on the date of the agreement. Fly Fitness has entered into the agreement based on their assessment of the franchisee's character, skills, aptitude, business ability, and financial capacity.
This means that a Fly Fitness franchisee cannot sell, assign, transfer, or encumber the agreement, the franchise, the franchised business, or any of its assets without first getting written consent from Fly Fitness. This restriction applies to any direct or indirect transfer, including those that occur by operation of law. If a franchisee attempts to transfer the franchise without obtaining prior written approval, Fly Fitness has the right to void the transfer.
These transfer restrictions are typical in franchising, as franchisors want to ensure that any new franchisee meets their standards and is capable of operating the business successfully. Obtaining franchisor approval often involves a review of the proposed transferee's financial qualifications, business experience, and personal background. The prospective franchisee may also need to undergo training and meet other requirements before the transfer is approved. This process protects the Fly Fitness brand and the interests of other franchisees in the system.
For a prospective Fly Fitness franchisee, this requirement means that they will need to plan ahead if they ever want to sell their franchise. They will need to find a qualified buyer and work with Fly Fitness to obtain the necessary approvals. Failure to do so could result in the transfer being voided, which could have significant financial consequences.