Does Fly Fitness have sole discretion in granting consent for a transfer?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.2 Restrictions on Transfers by Developer. Developer's rights and duties under this Agreement are personal to Developer, and Franchisor has made this Agreement with Developer in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Developer. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval. Franchisor may void any transfer made without such approval.
- 6.3 Transfers by Developer. Developer shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right granted or interest herein or hereunder (a "Transfer") or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless Developer first obtains the written consent of Franchisor, which Franchisor may or may not grant in Franchisor's sole discretion, and subject to the following:
- 6.3.1 The proposed transferee must be an individual of good moral character and otherwise meet Franchisor's then-applicable standards for multi-unit franchisees.
- 6.3.2 The transferee must have sufficient business experience, aptitude and financial resources to operate multiple Franchised Businesses and to comply with this Agreement;
- 6.3.3 The transferee has agreed to complete Franchisor's Initial Management Training Program to Franchisor's satisfaction;
- 6.3.4 Developer has paid all amounts owed to (i) Franchisor pursuant to this Agreement and all Franchise Agreements and other agreements between Franchisor and/or Franchisor's affiliates and Developer and (ii) third-party creditors;
- 6.3.5 The transferee has executed Franchisor's then-standard form of Multi-Unit Development Agreement, which may have terms and conditions different from this Agreement, for a term no less than the unexpired term of future development obligations due pursuant to the Mandatory Development Schedule of this Agreement;
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness retains sole discretion in granting consent for a transfer of the franchise. The document states that because the agreement between Fly Fitness and the developer is based on the character, skills, and abilities of the developer, any transfer of the agreement requires Fly Fitness's prior written approval. Fly Fitness may choose to grant or deny this approval at its sole discretion.
This means that a Fly Fitness franchisee cannot sell, assign, or transfer their franchise to someone else without first getting permission from Fly Fitness. This protects Fly Fitness by ensuring that any new franchisee meets their standards.
The FDD outlines several conditions that a proposed transferee must meet to be considered for approval, including having good moral character, sufficient business experience and financial resources, and completing Fly Fitness's Initial Management Training Program. Additionally, the franchisee must have paid all outstanding amounts owed to Fly Fitness and third-party creditors, and the transferee must execute Fly Fitness's then-standard form of Multi-Unit Development Agreement.