What is the nature of a Fly To Fit franchisee's commitment to develop businesses under the MUDA?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
ise may terminate this MUDA by giving notice to Franchisee, without opportunity to cure, if any of the following occur:
- (i) Franchisee fails to satisfy the development schedule; or
- (ii) Fly To Fit Franchise has the right to terminate any franchise agreement between Fly To Fit Franchise and Franchisee (or any affiliate thereof) due to Franchisee's default thereunder (whether or not Fly To Fit Franchise actually terminates such franchise agreement).
- 5. Limitation of Liability. Franchisee's commitment to develop Fly To Fit businesses is in the nature of an option only. If Fly To Fit Franchise terminates this MUDA for Franchisee's default, Franchisee shall not be liable to Fly To Fit Franchise for lost future revenues or profits from the unopened Fly To Fit businesses. Franchisee may terminate this MUDA at any time.
- 6. Conditions. Franchisee's right to develop each Fly To Fit franchise after the Store #1 is subject to the following:
- (i) Franchisee must possess sufficient financial and organizational capacity to develop, open, operate, and manage each additional Fly To Fit business, in the reasonable judgment of Fly To Fit Franchise, and
- (ii) Franchisee must be in full compliance with all brand requirements at its open Fly To Fit businesses, and not in default under any Franchise Agreement or any other agreement with Fly To Fit Franchise.
- 7. Dispute Resolution; Miscellaneous. The laws of the State of New York (without giving effect to its principles of conflicts of law) govern all adversarial proceedings between the parties. The parties agree that any New York law for the protection of franchisees or business opportunity purchasers will not apply unless its jurisdictional requirements are met independently without reference to this Section 7. Franchisee shall not Transfer this MUDA without the prior written consent of Fly To Fit Franchise, and any Transfer without Fly To Fit Franchise's prior written consent shall be void. The provisions of Article 17 (Dispute Resolution) and Article 18 (Miscellaneous) of the Franchise Agreement apply to and are incorporated into this MUDA as if fully set forth herein.
Source: Item 23 — RECEIPTS (FDD pages 44–134)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, a franchisee's commitment to develop multiple Fly To Fit businesses under a Multi-Unit Development Agreement (MUDA) is structured more as an option than a strict obligation. The franchisee agrees to a development schedule for opening Fly To Fit locations. Upon execution of the MUDA, the franchisee must pay the total Initial Franchise Fee to Fly To Fit, which is non-refundable.
However, Fly To Fit can terminate the MUDA if the franchisee fails to meet the development schedule or defaults on any franchise agreement. Despite the development schedule, the franchisee is not liable for lost future revenues or profits from unopened Fly To Fit businesses if the MUDA is terminated due to default. The franchisee also has the option to terminate the MUDA at any time.
The franchisee's right to develop each Fly To Fit franchise after the first store is contingent on having sufficient financial and organizational capacity, as determined by Fly To Fit, and being in full compliance with brand requirements and not in default under any agreements with Fly To Fit. For each additional Fly To Fit franchise, the franchisee must execute Fly To Fit's current standard franchise agreement within three business days of securing a location. The MUDA itself does not grant the right to operate a Fly To Fit business; a separate franchise agreement is required for each location.