Does the Punch King Fitness Franchise Agreement specify any obligations related to the transfer of the franchise?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| of any interest therein or in Franchise or Franchisee assets. | |||
| l. | Our approval of transfer by franchisee | Section XVI(B) | We have the right to approve all transfers but may not unreasonably withhold consent. |
| m. | Conditions for Punch King Fitness, Inc. approval of transfer | Section XVI(B) | All outstanding obligations related to the Franchised Business must be paid, and the transferor's right to receive compensation must be subordinated and secondary to our rights. The transferee must sign a written assumption; the transferee must meet Punch King Fitness standards; the transferee must sign a then current Punch King Fitness franchise agreement and other ancillary agreements; the transferee must successfully complete Punch King Fitness initial training, and you or the transferee must pay a transfer fee. |
| n. | Our right of first refusal to acquire your business | Section XVI(D) | We have the right, exercisable by written notice to you, to purchase such rights or interests for the price and on the terms and conditions of any offer for your Franchised Business, except we may substitute equivalent cash for any form of payment proposed in such offer. Any purchase by us must be completed within ninety (90) days after your receipt of our written notice. If we do not exercise our right of first refusal, you may complete the sale of interest to the bona fide purchaser, subject to our approval; however, if the sale to the purchaser is not completed within one hundred twenty (120) days after the delivery of the offer to us, we will again have the right of first refusal. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–53)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the Franchise Agreement outlines several obligations related to the transfer of a franchise. Punch King Fitness retains the right to approve all transfers, but this consent cannot be unreasonably withheld.
Specifically, Section XVI(B) details conditions that must be met for Punch King Fitness to approve a transfer. All outstanding financial obligations related to the franchise must be settled. Additionally, the transferor's right to receive compensation must be subordinated to Punch King Fitness's rights. The transferee is required to sign a written agreement assuming the obligations of the franchise, meet Punch King Fitness's standards, and execute the then-current franchise agreement along with any other necessary ancillary agreements. The transferee must also successfully complete Punch King Fitness's initial training program. Finally, either the transferor or the transferee is responsible for paying a transfer fee.
Furthermore, Punch King Fitness has a right of first refusal to acquire the franchise business. According to Section XVI(D), Punch King Fitness can exercise this right by providing written notice and purchasing the rights or interests under the same terms and conditions as any offer the franchisee has received. Punch King Fitness can substitute equivalent cash for any proposed form of payment. Any purchase by Punch King Fitness must be completed within 90 days of the franchisee's receipt of the written notice. If Punch King Fitness does not exercise its right of first refusal, the franchisee has 120 days to complete the sale to the bona fide purchaser, subject to Punch King Fitness's approval. After that 120 day period, Punch King Fitness's right of first refusal is reinstated.