Is a transfer of ownership rights in the Fly Fitness franchisee considered a Transfer?

According to Fly Fitness's 2024 Franchise Disclosure Document, any transfer of ownership rights is considered a "Transfer" and requires the franchisor's approval. Fly Fitness emphasizes that the rights and duties under the Franchise Agreement are personal to the franchisee and its principals as they exist when the agreement is signed. The franchisor enters the agreement based on their assessment of the individual and collective character, skills, aptitude, attitude, business ability, and financial capacity of the franchisee.

Specifically, the FDD states that the franchisee cannot directly or indirectly sell, assign, transfer, give, devise, convey, or encumber the agreement, any rights or interests within it, the franchise itself, the franchised business, or any of its assets without first obtaining written consent from Fly Fitness. This restriction applies unless the transfer occurs in the ordinary course of business. Furthermore, Fly Fitness retains the right to void any transfer made without their prior approval.

This clause is significant for potential Fly Fitness franchisees because it restricts their ability to sell or transfer the franchise to another party without the franchisor's permission. This control allows Fly Fitness to maintain standards and ensure that any new franchisee meets their criteria. A prospective franchisee should carefully consider this restriction, as it could affect their exit strategy or ability to capitalize on the business's value in the future.