Under what conditions can Fly Fitness terminate the agreement with a developer?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ch transfer is subject to Franchisor 's prior written approval pursuant to Section 6.3 hereof. However, if (i) the sale to the transferee is not completed within one hundred twenty (120) days after the offer is given to Franchisor or (ii) there is any material change in the terms of the offer, the offer will again be subject to Franchisor's right of first refusal.
- 6.6 Death or Permanent Disability. The grant of rights under this Agreement is personal to Developer, and on the death or permanent disability of Developer, the executor, administrator, conservator, or other personal representative of Developer shall be required to transfer Developer's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor. Failure to transfer in accordance with the forgoing will constitute a material default and all that is granted by this Agreement will terminate. A transfer under this Section 6.6, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 6 and unless transferred by gift, devise, or inheritance, subject to the terms of Section 6.5 above. For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Developer's Fly Fitness outlet(s) and remaining development schedule during the six (6)-month period from its onset.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the agreement with a developer can be terminated under specific conditions. The developer is considered in material default, leading to automatic termination without notice, if the developer becomes insolvent or makes a general assignment for the benefit of creditors.
Additionally, the agreement can be terminated if the developer dies or becomes permanently disabled and fails to transfer their interest in the agreement within six months to a third party approved by Fly Fitness. This transfer must adhere to the conditions outlined for transfers within the agreement. Permanent disability is defined as a mental or physical condition that prevents the developer from providing continuous supervision of the Fly Fitness outlet(s) and development schedule during the six-month period following the onset of the disability.
These termination conditions protect Fly Fitness by ensuring the continued operation and management of the franchise locations, even in adverse circumstances such as financial instability, death, or disability of the developer. Prospective developers should understand these conditions and have plans in place to address these potential issues to avoid termination of their agreement.