What is the purpose of Section VII, 'Termination,' in the Punch King Fitness Area Development Agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
VII. Termination
C. Events of Default
Any one or more of the following constitutes an "Event of Default" hereunder:
- 1. Developer fails to pay any initial franchise fee or execute any Franchise Agreement by any Fee Deadline specified in the Development Schedule;
- 2. Developer fails to have opened and maintained in continuous operation the minimum number of Punch King Fitness Franchised Businesses specified in the Development Schedule by any Opening Deadline specified in the Development Schedule;
- 3. A default occurs under any Franchise Agreement, resulting in the termination of such Franchise Agreement; or
- 4. Developer breaches or otherwise fails to comply fully with any other provision contained in this Agreement herein or any other agreement between the Franchisor and/or its Affiliates.
D. Remedies
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)
According to the 2024 Punch King Fitness Franchise Disclosure Document, Section VII, 'Termination,' outlines the conditions under which the Area Development Agreement can be terminated. This section specifies what constitutes an 'Event of Default' by the developer, which would allow Punch King Fitness to terminate the agreement. These events include failing to pay the initial franchise fee or execute Franchise Agreements by the specified Fee Deadlines in the Development Schedule, failing to open and maintain the minimum number of Punch King Fitness Franchised Businesses by the Opening Deadlines, a default occurring under any Franchise Agreement leading to its termination, or any breach or failure to comply with any provision of the Area Development Agreement or other agreements with Punch King Fitness or its affiliates.
If any of these Events of Default occur, Punch King Fitness has the right to declare the Area Development Agreement and all rights granted to the developer immediately terminated and of no further effect. Upon termination due to an Event of Default, Punch King Fitness's sole remedies are retaining the Development Fee and terminating the agreement. However, failure to meet the Development Schedule for opening and operating Punch King Fitness Franchised Businesses does not automatically cause termination of any previously executed Franchise Agreement.
Upon termination of the Area Development Agreement for any reason, Punch King Fitness is entitled to retain the Development Fee, and the developer remains responsible for all obligations, debts, and liabilities, including those accrued before termination. The right to terminate the agreement 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 section essentially protects Punch King Fitness by setting clear expectations for the developer and providing recourse if those expectations are not met, while also outlining the developer's responsibilities even after termination.