Can Punch King Fitness terminate the Area Development Agreement without cause?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
| Pro | ovision | Section in Area Development Agreement | Summary |
|---|---|---|---|
| e. | Termination by us without cause | Not applicable | |
| f. | Termination by us with cause | Section VII | We can terminate only if you default. We can terminate the Area Development Agreement if the Franchise Agreement is terminated. Termination of the Area Development Agreement is not cause for terminating the Franchise Agreement. |
| g. | "Cause" defined defaults which can be cured | Not applicable | |
| h. | "Cause" defined defaults which cannot be cured | Section VII(A) | We may terminate the agreement if you fail to pay any initial franchise fee or execute any Franchise Agreement by any Fee Deadline specified in the Development Schedule; you fail 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; if a default occurs under any Franchise Agreement, resulting in the termination of such Franchise Agreement; or you breach or otherwise fail to comply fully with any other provision contained in this Area Development Agreement or any other agreement between the Franchisor and/or its Affiliates. However, a default under the Area Development Agreement is not cause for termination of any existing Franchise Agreements. |
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, Punch King Fitness cannot terminate the Area Development Agreement without cause. The FDD states that Punch King Fitness can only terminate the agreement if the franchisee defaults.
Specifically, Punch King Fitness can terminate the Area Development Agreement if the Franchise Agreement is terminated. However, the termination of the Area Development Agreement is not cause for terminating the Franchise Agreement.
Defaults that can lead to termination include failing to pay the initial franchise fee, failing to execute any Franchise Agreement by any Fee Deadline specified in the Development Schedule, failing to open and maintain the minimum number of Punch King Fitness Franchised Businesses by any Opening Deadline, a default occurring under any Franchise Agreement, or breaching any provision of the Area Development Agreement or any other agreement with Punch King Fitness.