Are Punch King Fitness affiliates entitled to all remedies provided in Section 2 of the franchise agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
If any Event of Default occurs, Franchisor may declare this Agreement and any and all other rights granted to Developer under this Agreement to be immediately terminated and of no further force or effect, as follows:
- 1. Upon termination of an Event of Default listed herein, Franchisor's sole remedies under this Agreement will be retention of the Development Fee and termination of this Agreement. A failure to open and thereafter operate Punch King Fitness Franchised Businesses in accordance with the Development Schedule will not, in itself, constitute cause for Franchisor to terminate any previously executed Franchise Agreement.
- 2. Upon termination of this Agreement for any other reason whatsoever, Franchisor shall be entitled to retain the Development Fee, and Developer will not be relieved of any of its obligations, debts, or liabilities hereunder, including without limitation any debts, obligations, or liabilities which have accrued prior to such termination. The right of termination granted by this Agreement is in addition to, and not in lieu of, any and all other rights and remedies available to Franchisor at law, in equity or otherwise, including without limitation the right to injunctive relief, all of which are cumulative.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
Based on the 2024 Punch King Fitness Franchise Disclosure Document, Section VII (Termination) subsection D (Remedies) of the Development Agreement outlines the remedies available to Punch King Fitness in the event of a Developer default. If a Developer fails to meet the obligations outlined in the Development Agreement, such as failing to pay the initial franchise fee or open the minimum number of Punch King Fitness locations by the specified deadlines, Punch King Fitness has the right to terminate the agreement.
Upon termination due to a listed Event of Default, Punch King Fitness's sole remedies are retention of the Development Fee and termination of the agreement. However, termination for any other reason allows Punch King Fitness to retain the Development Fee, and the Developer remains responsible for all outstanding obligations and liabilities.
The document explicitly states that the right of termination is in addition to any other rights and remedies available to Punch King Fitness at law or in equity, including the right to seek injunctive relief. This means Punch King Fitness is not limited to just terminating the agreement and retaining the fee; they can also pursue legal action to enforce the agreement or prevent further breaches. This provides Punch King Fitness with a comprehensive set of options to protect its interests in case of a default by the Developer.