What rights does Fly Fitness reserve that are not expressly granted in the Franchise Agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
nts you no options, rights of first refusal or similar rights to acquire additional franchises.
We reserve all rights not expressly granted in the Franchise Agreement. For example, we or our affiliates may own, operate, or authorize others to own or operate Fly Fitness outlets outside of the Territory and may operate other kinds of businesses within the Territory. Although we do not currently do so and have no plans to do so, we and our affiliates may own, acquire, conduct, or authorize others to conduct, any form of business at any location selling any type of product or service not offered under the Marks, including a product or service similar to those you will sell at your Franchised Business. We reserve the right to merge with, acquire, or be acquired by, an existing competitive or non-competitive franchise network, chain, or other business; however, we will not convert any acquired business in your Territory to a franchise using our primary trademarks during the Term of your Franchise Agreement.
We and our affiliates may sell products and services under the Marks within or outside the Territory or development area through any method of distribution other than a dedicated Fly Fitness outlet location, such as distribution through retail outlets, including but not limited to, grocery stores; in captive market locations, such as airports and malls; and the Internet ("Alternative Distribution Channels"). You will receive no compensation for our sales through Alternative Distribution Channels in the Territory or development area.
You may only solicit sales from customers in your Territory. You may not use Alternative Distribution Channels, such as the Internet, catalog sales, telemarketing, or other direct marketing to make sales outside your Territory; however, we will include a listing on our website of your Fly Fitness outlet location. Your local advertising must target customers in your Territory, although the reach of your local advertising may extend beyond your Territory.
The Franchise Agreement does not grant you any right to participate in franchises, licensing programs or other business proposals for the sale and distribution of Fly Fitness products or services through Alternate Distribution Channels.
Source: Item 12 — TERRITORY (FDD pages 29–31)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness retains all rights not explicitly granted to the franchisee in the Franchise Agreement. This means Fly Fitness has broad latitude to operate and expand its business as it sees fit, even if those activities impact individual franchisees. Fly Fitness or its affiliates can own, operate, or authorize others to run Fly Fitness outlets outside of a franchisee's territory. They can also operate other types of businesses, even those selling similar products or services, within a franchisee's territory. Fly Fitness retains the right to merge with, acquire, or be acquired by another franchise network or business, but they will not convert any acquired business in the franchisee's territory to a Fly Fitness franchise using their primary trademarks during the term of the Franchise Agreement.
Fly Fitness and its affiliates can also sell products and services under the Fly Fitness brand through alternative distribution channels like retail outlets, captive market locations (airports, malls), and the Internet, both within and outside a franchisee's territory or development area. Franchisees will not receive any compensation for sales made through these alternative distribution channels. While franchisees can solicit sales from customers within their territory and are listed on the Fly Fitness website, they cannot use alternative distribution channels to make sales outside their territory.
These reservations of rights have significant implications for prospective Fly Fitness franchisees. The lack of an exclusive territory and the ability of Fly Fitness to utilize alternative distribution channels means that franchisees may face direct competition from the franchisor itself, as well as from other franchisees and competitive brands. The franchisee's local advertising must target customers in their territory, but the reach of that advertising may extend beyond the territory. The Franchise Agreement does not grant franchisees any right to participate in franchises, licensing programs, or other business proposals for the sale and distribution of Fly Fitness products or services through alternate distribution channels. Therefore, franchisees should carefully consider the potential impact of these reserved rights on their business's profitability and market share.