What must Fly To Fit do with any benefit obtained from a franchisee's transaction with another person in Indiana?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
2. Certain Provisions Modified. Any provision of the Agreement which would have any of the following effects is hereby modified to the extent required for the Agreement to be in compliance with the Indiana Acts:
(4) Allowing the franchisor to obtain money, goods, services, or any other benefit from any other person with whom the franchisee does business, on account of, or in relation to, the transaction between the franchisee and the other person, other than for compensation for services rendered by the franchisor, unless the benefit is promptly accounted for, and transmitted to the franchisee.
Source: Item 23 — RECEIPTS (FDD pages 44–134)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the Indiana Rider to the Franchise and Multi-Unit Development Agreement addresses benefits Fly To Fit receives from a franchisee's transactions with another party. Specifically, if Fly To Fit obtains money, goods, services, or any other benefit from a third party due to a transaction between the franchisee and that third party, Fly To Fit must promptly account for and transmit that benefit to the franchisee. This requirement does not apply to compensation for services rendered by Fly To Fit.
This provision aims to prevent Fly To Fit from profiting unfairly from its franchisees' business dealings. It ensures that any financial advantages gained by Fly To Fit as a result of a franchisee's transactions are passed on to the franchisee, maintaining a fair relationship between the two parties. The exception for compensation for services rendered by Fly To Fit acknowledges legitimate payments for services provided by the franchisor.
For a prospective Fly To Fit franchisee in Indiana, this means that if Fly To Fit receives any kickbacks, rebates, or other benefits from suppliers or other businesses due to the franchisee's purchases or transactions, Fly To Fit is obligated to pass those benefits directly to the franchisee. This protects the franchisee from hidden costs or unfair practices and promotes transparency in financial dealings.
It is important for potential franchisees to understand this provision and ensure that Fly To Fit adheres to it. Franchisees should maintain records of their transactions and be vigilant in monitoring whether any benefits are being passed back to them as required by the Indiana Rider. This clause provides a legal safeguard for franchisees against potential exploitation by the franchisor.