Does the transferee need to meet Punch King Fitness standards for a transfer to be approved?
Punch_King_Fitness Franchise · 2024 FDDAnswer 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. |
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, a transfer of a franchise is contingent upon the transferee meeting Punch King Fitness's standards. Specifically, the franchisor must approve all transfers, but they cannot unreasonably withhold consent.
Several conditions must be met for Punch King Fitness to approve a transfer. All outstanding obligations related to the franchised business must be paid. Additionally, the transferor's right to receive compensation must be subordinated and secondary to Punch King Fitness's rights. The transferee is required to sign a written assumption, meet Punch King Fitness standards, sign the then-current franchise agreement and other ancillary agreements, and successfully complete Punch King Fitness's initial training program.
Furthermore, either the current franchisee or the transferee is responsible for paying a transfer fee. Punch King Fitness also retains the right of first refusal to acquire the business, allowing them to purchase the rights or interests under the same terms as any offer made for the franchised business. This provision ensures that Punch King Fitness maintains control over who enters their franchise system and that the brand's standards are upheld by all franchisees.