What is the significance of the Punch King Fitness 'Exhibits' in the Area Development Agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
II. FEES
The total amount of the Development Fee is listed in Exhibit 2 (the "Development Fee"). The Development Fee will be applied toward the initial franchise fee due under subsequent Franchise Agreements in the manner specified in Exhibit 2. Developer will pay the balance of the initial franchise fee as so stipulated and due under the then Current Franchise Agreement for each Franchised Business at the time the Franchise Agreement for each Franchised Business is executed. The Development Fee will not be refundable, notwithstanding anything to the contrary in this Agreement or any Franchise Agreement.
III. DEVELOPMENT SCHEDULE
Developer must enter into Franchise Agreements and open and operate Punch King Fitness Franchised Business in accordance with the deadlines set forth in the Development Schedule. By each "Fee Deadline" specified in the Development Schedule, Developer must have delivered to Franchisor an initial franchise fee and a signed copy of Franchisor's then-current standard form of Franchise Agreement for the number of Punch King Fitness Franchised Businesses specified on the Development Schedule. By each "Opening Deadline" specified in the Development Schedule, Developer must have the specified number of Punch King Fitness Franchised Businesses open and operating. Developer must locate the
Punch King Fitness Franchised Businesses only at sites that Franchisor has accepted in accordance with the terms of the applicable Franchise Agreement.
IV. DEVELOPMENT AREA
A. Exclusivity
While this Agreement is in effect, provided that Developer opens and operates Punch King Fitness Franchised Businesses in accordance with the Development Schedule, and the minimum number of Franchised Business that Developer has open and is operating in the Development Area at any given time is not less than the minimum required pursuant to the Development Schedule, Franchisor shall not establish or license another to establish the same Punch King Fitness Model Concept in the Development Area; however, the Franchisor may establish or license another to establish a Punch King Fitness Model Concept including but not limited to storefront, brick, and mortar, co-branded, pop-up, virtual, or mobile outlets that are different than Developer's Model Concept within the Development Area under the Punch King Fitness Marks and the System within the Development Area.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to the 2024 Punch King Fitness Franchise Disclosure Document, the Area Development Agreement includes exhibits that detail critical aspects of the agreement between the franchisor and the developer. Exhibit 1 designates the Development Area, outlining the specific geographical region where the developer has the right and obligation to establish and operate Punch King Fitness Franchised Businesses. Exhibit 2 contains the Development Schedule, specifying the number of Franchised Businesses the developer must open and operate, along with the associated Fee Deadlines and Opening Deadlines. These deadlines dictate when the initial franchise fee and signed Franchise Agreements must be submitted, and when the Franchised Businesses must be operational. These exhibits are critical for defining the scope and expectations of the Area Development Agreement.
The Development Fee, the total amount of which is listed in Exhibit 2, is applied toward the initial franchise fee due under subsequent Franchise Agreements. This fee is non-refundable, regardless of any conflicting information in the Area Development Agreement or any Franchise Agreement. The developer must adhere to the Development Schedule, entering into Franchise Agreements and opening Punch King Fitness Franchised Businesses by the specified deadlines. Failure to meet these deadlines could result in a breach of the agreement.
While the Area Development Agreement grants the developer the right to establish and operate Punch King Fitness Franchised Businesses within the Development Area, this right is contingent upon compliance with the Development Schedule and maintaining the minimum number of open and operating Franchised Businesses. Punch King Fitness retains the right to establish or license others to establish different Punch King Fitness Model Concepts within the Development Area, which could include storefront, brick and mortar, co-branded, pop-up, virtual, or mobile outlets. This highlights the importance of understanding the specific terms and conditions outlined in the exhibits to the Area Development Agreement, as they define the developer's rights and obligations, as well as the franchisor's retained rights within the Development Area.