Must a Fly To Fit Franchisee pay all monetary obligations before a transfer can be approved?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
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ARTICLE 15. TRANSFERS
- 15.1 By Fly To Fit Franchise. Fly To Fit Franchise may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Fly To Fit Franchise may undergo a change in ownership and/or control, without 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.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, a franchisee must have paid all monetary obligations to Fly To Fit and its affiliates, as well as to any lessor, vendor, supplier, or lender to the business, before a transfer of the franchise can be approved. Additionally, the franchisee must not be in default or breach of the Franchise Agreement or any other obligation owed to Fly To Fit or its affiliates. This requirement ensures that Fly To Fit maintains financial stability and receives all outstanding payments before allowing a transfer of ownership.
This condition is a standard practice in franchising, as franchisors typically want to ensure that all debts and obligations are settled before a new franchisee takes over. For a prospective Fly To Fit franchisee looking to sell their business in the future, this means keeping up-to-date with all payments and adhering to the terms of the Franchise Agreement. Failure to do so could delay or even prevent the transfer of the franchise.
Furthermore, the proposed assignee must also meet certain conditions, such as completing Fly To Fit's franchise application processes, meeting the then-applicable standards for new franchisees, and not being a competitor. The proposed assignee must also execute Fly To Fit's then-current form of franchise agreement and any related documents, which may contain materially different provisions than the original agreement. All owners of the proposed assignee must also provide a guaranty. These conditions collectively protect Fly To Fit's interests and ensure that any new franchisee is qualified and committed to the brand's standards.