Does Punch King Fitness have a right of first refusal to purchase the assets of a franchise in Michigan?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
B. No Other Restrictions
Developer acknowledges that, except to the extent expressly provided herein, Franchisor expressly retains all rights and discretion with respect to the Marks and System, including the right to:
- 1. establish and license others to establish Punch King Fitness Franchised Businesses at any location outside of the Development Area;
- 2. establish, and license others to establish businesses [other than a Competitive Business (as defined below)] under other systems using other proprietary marks at such locations, including within the Development Area, and on such terms and conditions as Franchisor deems appropriate;
- 3. purchase or otherwise acquire the assets or controlling ownership of, and thereafter continue to own and operate, one or more businesses identical or similar to the Punch King Fitness Franchised Businesses (and/or acquire a franchise, license, and/or similar agreements for such businesses), some or all of which may be located anywhere, including within the Development Area that does not use the Marks;
- 4. acquire (regardless of the form of the transaction) by any business, even if the other business operates, franchises, and/or licenses Competitive Businesses within the Development Area;
- 5. sell the services and products authorized for Franchised Business using the Marks or other trademarks, service marks, and commercial symbols through alternate channels of distribution or Model Concepts, including but not limited to a storefront, brick, and mortar, co-branded, pop-up, virtual, or mobile outlets, joint marketing with partner companies, direct mail, catalog sales,
internet sites, and co-branding strategies, pursuant to such terms and conditions as Franchisor deems appropriate; and
- 6. advertise, promote, market, or sell goods or services using the Marks over the internet, the world wide web, or any other electronic network.
- 7. engage in any activities not expressly forbidden by this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, it is not explicitly stated whether Punch King Fitness has a right of first refusal to purchase the assets of a franchise in Michigan. However, the FDD does state that Punch King Fitness retains rights and discretion with respect to the brand, including the right to purchase or acquire the assets or controlling ownership of businesses identical or similar to Punch King Fitness Franchised Businesses. This acquisition can occur anywhere, including within a Development Area, regardless of whether the business uses the Punch King Fitness Marks.
This clause implies that Punch King Fitness could potentially acquire a franchise in Michigan, but it does not specify a right of first refusal. A right of first refusal would mean the franchisee is obligated to offer the business to Punch King Fitness before selling to a third party. The FDD excerpt does not clarify if such a stipulation exists.
A prospective franchisee should seek clarification from Punch King Fitness regarding their specific rights and obligations concerning the sale of their franchise, including whether Punch King Fitness has a right of first refusal or any other conditions that might affect the franchisee's ability to sell their business. It would be prudent to discuss this point with current franchisees as well.