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What topics regarding franchise operations are summarized in the Punch King Fitness Franchise Agreement?

Punch_King_Fitness Franchise · 2024 FDD

Answer 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.
o. Our option to purchase your business Section XX (8) Upon termination or expiration of your Franchise Agreement, at our option (to be exercised within thirty (30) days after termination), you must sell to us any or all of the furnishings, equipment, signs, fixtures, supplies, or inventory related to the operation of your Franchised Business, at the depreciated book value.
are declared bankrupt or insolvent or you are the debtor
in a voluntary or involuntary bankruptcy proceeding
under the U.S. Bankruptcy Code; a receiver is appointed
for you or for any part of your property, or you make
any assignment for the benefit your creditors, if not
dismissed within fifteen (15) days; you lose the right to
possession of the premises upon which the Franchised
Business is located, or otherwise forfeit the right to do
or transact business in the jurisdiction where the
Franchised Business is located; Franchisee fails, for a
period of ten (10) days after receipt of notification of
noncompliance, to comply with any federal, state or
local law or regulation applicable to the operation of the
Franchised Business; you make any transfer or
attempted transfer that fails to comply with this
Agreement; the Franchised Business is seized, taken
over or foreclosed by a government official in the
exercise of his duties, or seized, taken over or foreclosed
by a creditor, lien holder or lessor; a final judgment
against you remains unsatisfied for thirty (30) days
(unless superseded as or other appeal bond has been
filed), or a levy of execution has been made upon the
franchise granted by this Agreement or upon any
property used in the Franchised Business
that is not
discharged within five (5) days of such levy; any conduct
or activity by you or any of your Principals, directors, or
officers that Franchisor believes is reasonably likely to
have an adverse effect or reflect unfavorably on the
Franchised Business, us, the Punch King Fitness System,
the Marks, or the goodwill associated; you knowingly
maintain false books or records, or knowingly submit
any false reports to us, or knowingly understate your
Gross Revenues reported to Franchisor; any threat or
danger to public health or safety
resulting from the
construction, maintenance, or operation of the
Franchised Business, and you have not immediately
commenced actions to cure the problem or have not
promptly cured or corrected the problem or activity that
gave rise to the threat or danger; you make or attempt
to make any transfer or assignment of the Franchised
Business, Franchise business assets, rights under the
Agreement, or ownership the Franchised Business
contrary to the Franchise Agreement; or you
or any of
Pro ovision Section in Franchise Agreement Summary
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your Principals violate any of the Covenants of the Franchisee, commit an infringement of the Proprietary Marks, or communicate, divulge, or use Confidential Information contrary to the Franchise Agreement.
i. Your obligations on termination or nonrenewal Article XX Upon the termination, you must: cease to operate your Franchised Business and not hold itself out as a present or former Punch King Fitness franchisee of Franchisor; cease to use the Punch King Fitness System or Punch King Fitness Marks; make modifications to the Franchised Business Site to prevent the operation of any business on the Site that might be deemed substantially similar to the Punch King Fitness Franchised Business; at our option, assign to us (i) telephone numbers of the Franchised Business and all related Yellow Pages, White Pages, and other business listings, and (ii) Web Sites, web pages, listings, banners, URLs, advertisements, or any other services and links, and sell us the assets of the Franchised Business; turn over the Pun

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, Item 17 summarizes key aspects of the Franchise Agreement related to renewal, termination, transfer, and dispute resolution.

Specifically, the FDD outlines conditions under which Punch King Fitness can approve or deny a transfer of the franchise. Punch King Fitness has the right to approve all transfers, but may not unreasonably withhold consent. To gain approval, 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 Punch King Fitness's rights. The transferee must sign a written assumption, meet Punch King Fitness standards, sign the then-current franchise agreement and ancillary agreements, and successfully complete initial training. Additionally, either the transferor or transferee must pay a transfer fee.

The document also details Punch King Fitness's right of first refusal to acquire the franchisee's business. Punch King Fitness can purchase the rights or interests for the price and terms of any offer the franchisee receives, substituting equivalent cash for any proposed payment form. This right is exercisable with written notice, and the purchase must be completed within ninety days of the franchisee's receipt of the notice. If Punch King Fitness doesn't exercise this right, the franchisee can proceed with the sale, subject to Punch King Fitness's approval, within one hundred twenty days; otherwise, Punch King Fitness's right of first refusal is reinstated.

Furthermore, upon termination or expiration of the Franchise Agreement, Punch King Fitness has the option to purchase the furnishings, equipment, signs, fixtures, supplies, or inventory related to the franchise at their depreciated book value. This option must be exercised within thirty days after termination. The FDD also lists several conditions that could lead to termination of the franchise agreement, such as bankruptcy, failure to comply with laws, unauthorized transfer attempts, seizure of the business, unsatisfied judgments, conduct that adversely affects the brand, false reporting, threats to public health, and violation of covenants or infringement of proprietary marks.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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