Under what section of the Fly Fitness franchise agreement are the terms for transfers of the franchise outlined?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
16. TRANSFERS.
16.1. Transfers by Franchisor.
- 16.1.1.
Franchisor shall have the right to assign this Agreement, and all of Franchisor's rights and privileges hereunder, to any person, firm, corporation, or other entity, without Franchisee's permission or prior knowledge, provided that, with respect to any assignment resulting in the subsequent performance by the assignee of Franchisor's obligations, the assignee shall expressly assume and agree to perform Franchisor's obligations hereunder.
Specifically, and without limitation to the foregoing, Franchisee expressly affirms and agrees that Franchisor may: (i) sell Franchisor's assets and Franchisor's rights to the Marks and the System outright to a third party; (ii) engage in a public or private placement of some or all of Franchisor's securities; (iii) merge, acquire other corporations, or be acquired by another corporation, including competitors; (iv) undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and (v) with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or relating to the loss of association with or identification of Franchisor.
Nothing contained in this Agreement shall require Franchisor to remain in the business franchised herein or to offer the same products and services, whether or not bearing the Marks, in the event that Franchisor exercises its prerogative hereunder to assign Franchisor's rights in this Agreement.
- 16.1.2.
Franchisee agrees that Franchisor has the right, now or in the future, to purchase, merge, acquire or affiliate with an existing competitive or non-competitive franchise network, chain or any other business regardless of the location of that chain's or business' facilities, and to operate, franchise or license those businesses and/or facilities operating under the Marks or any other marks following Franchisor's purchase, merger, acquisition or affiliation, regardless of the location of the facilities (which Franchisee acknowledges may be within the Territory, proximate thereto, or proximate to any of Franchisee's locations).
However, Franchisor represents that it will not convert any such acquired facilities that are operating within the Territory to a Fly Fitness franchise during the Term of this Agreement.
- 16.1.3.
If Franchisor assigns its rights in this Agreement, nothing herein shall be deemed to require Franchisor to remain in the fitness business or to offer or sell any products or services to Franchisee.
- 16.2.
Restrictions on Transfers by Franchisee.
Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee.
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 the 2024 Fly Fitness Franchise Disclosure Document, the terms and conditions for transfers of the franchise, both by the franchisor and the franchisee, are detailed in Section 16, titled "TRANSFERS." This section covers various aspects of transferring the franchise agreement, including the rights and restrictions applicable to both Fly Fitness and the franchisee.
Specifically, Section 16.1 addresses transfers by Fly Fitness, outlining the company's right to assign the agreement to another entity without the franchisee's permission. This includes scenarios such as selling assets, engaging in securities placements, or merging with other corporations. Section 16.2 details restrictions on transfers by the franchisee, emphasizing that the franchisee's rights and duties are personal and based on Fly Fitness's assessment of their character, skills, and financial capacity. Consequently, any transfer by the franchisee requires Fly Fitness's prior written approval, and any transfer without this approval may be voided.
Section 16.3 further elaborates on transfers initiated by the franchisee, stating that the franchisee cannot directly or indirectly sell, assign, transfer, or encumber the agreement, franchise, franchised business, or any related assets without obtaining Fly Fitness's written consent. This comprehensive section provides a framework for understanding the conditions under which a Fly Fitness franchise can be transferred, ensuring compliance and protecting the interests of both parties.