Does Fly To Fit Franchise have to approve the proposed assignee as a franchisee before a transfer can occur?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
hout the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Fly To Fit Franchise entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Fly To Fit Franchise at least 60 days prior notice of the proposed Transfer, and without obtaining Fly To Fit Franchise's consent. In granting any such consent, Fly To Fit Franchise may impose conditions, including, without limitation, the following:
- (i) Fly To Fit Franchise receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Fly To Fit Franchise;
- (ii) the proposed assignee and its owners have completed Fly To Fit Franchise's franchise application processes, me
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise to another party, Fly To Fit Franchise must approve the proposed assignee as a franchisee. Specifically, the proposed assignee and their owners must complete Fly To Fit's franchise application processes, meet the then-applicable standards for new franchisees, and be approved by Fly To Fit Franchise as franchisees. This requirement is in place to ensure that any new franchisee meets the standards and qualifications that Fly To Fit deems necessary to maintain the brand's reputation and operational consistency.
This approval process is a standard practice in franchising, as franchisors typically want to ensure that new franchisees are a good fit for the system. Fly To Fit also requires that the franchisee provide at least 60 days prior notice of the proposed transfer. In addition to the assignee meeting Fly To Fit's standards, Fly To Fit Franchise can impose other conditions such as receiving a transfer fee of $10,000 plus any broker fees and out-of-pocket costs, ensuring the proposed assignee is not a competitor, and that the proposed assignee executes Fly To Fit's then-current form of franchise agreement.
Furthermore, all owners of the proposed assignee must provide a guaranty, the franchisee must have paid all monetary obligations to Fly To Fit and its affiliates, and the proposed assignee and its owners and employees must undergo any training that Fly To Fit may require. The franchisee, its owners, and the transferee and its owners must also execute a general release of Fly To Fit in a form satisfactory to Fly To Fit, and the business must fully comply with all of Fly To Fit's most recent System Standards. These conditions collectively ensure that the transfer process is thorough and protects the interests of Fly To Fit and its existing franchisees.