Club
CLOSING
Considerations
2020 Issue 4 | GearedUp
32
Most franchisees ( understandably ) prefer to focus their efforts on opening new clubs . There are , however , a number of reasons why a franchisee may want or need to close a club — for example , the relocation of an existing club , a dispute with a landlord , the voluntary or involuntary termination of the franchise agreement , or simply because the franchise agreement and lease are expiring . When and if the time to close a club arrives , franchisees need to be mindful of the obligations ( and timelines ) associated with doing so .
As a general matter , one of the first things a franchisee needs to do is ensure that PFHQ agrees the franchisee has permission to close . If the club closure is tied to the natural expiration of the franchise agreement or the relocation of an existing club , then this is not generally an issue . If , however , the franchisee wants or needs to close prior to the natural expiration of the franchise agreement , the franchisee needs to know that they may not have the unilateral right to decide to cease operating ( as usual , you should consult with your attorney to fully understand your legal rights ). But , again , either way , franchisees should be discussing their closure plans with , and ensuring they have permission ( if required ) from , PFHQ . Once a determination has been made that the franchisee has the right to close , the next step is generally to identify a proposed closing date . Franchisees need to be mindful that the closing date almost always should NOT be the same day the lease expires . As discussed below , franchisees need to ensure that they have sufficient time between the date the club closes and the expiration of the lease to complete the de-identification requirements ( usually around 30 days ).
After making the decision to close and by J . Mark Dady identifying the closing date , franchisees should begin to consider who needs to receive notice of the closure and when those notices should be sent ( e . g ., you do not want to wait until the last day to provide notice to your staff , but you generally do not want to provide notice six months in advance ). PFHQ has a helpful “ club closing playbook ” which identifies groups of people a franchisee may want or need to provide notice to , depending upon the reason the club is closing .
Once the preliminary work associated with the closure is complete and the day of the closure has arrived , the process of de-identifying can begin in earnest . Until this point in time , however , franchisees need to be mindful that they need to continue complying with their general obligations under the franchise agreement ( e . g ., they do not generally have the right to start de-identifying or stop performing prior to closure ). The