What is the dependency between site approval and the establishment of another Punch King Fitness franchise?

According to Punch King Fitness's 2024 Franchise Disclosure Document, the franchisor's ability to establish or license another Punch King Fitness franchise within a franchisee's Site Selection Territory is directly dependent on site approval. Specifically, Punch King Fitness will not establish or license another to establish a Punch King Fitness Franchised Business within the Site Selection Territory until Punch King Fitness approves a location for the Franchised Business or until the expiration of the Site Selection Period, whichever event occurs first. This clause protects the franchisee during the initial site selection phase.

This means that during the Site Selection Period, which is one month after the execution of the Franchise Agreement, Punch King Fitness gives the franchisee a protected window to find and secure a suitable location. The franchisor agrees not to open another franchise in that territory until the earlier of either the franchisee's site being approved or the Site Selection Period expiring. This provides the new franchisee with a degree of exclusivity while they are establishing their business.

However, this protection is temporary. Once the Site Selection Period expires or a site is approved, Punch King Fitness is no longer restricted from establishing or licensing another franchise in the area. This highlights the importance of the franchisee finding and securing an approved site within the given timeframe to maintain some level of market exclusivity, at least initially. If the franchisee fails to acquire or lease a site within the Site Selection Period, it constitutes a default of the Franchise Agreement and the Site Selection Addendum.