de-identification process has several parts and obligations . Pursuant to the standard form of Planet Fitness ® franchise agreement , franchisees are required , upon the termination or expiration of their franchise agreement , to take certain steps to de-brand the location so it is no longer recognizable as a Planet Fitness location . Section 16.4 of the franchise agreement says , generally , that franchisees are required to comply with PFHQ ’ s “ then-current de-branding checklist ,” but also includes certain specific actions franchisees are required to take . While some of the obligations are relatively obvious — removing interior and exterior signage and the PF ® marks — some are less obvious and more burdensome — obligations to remove the “ purple / yellow color scheme .”
While franchisees should understand what both the franchise agreement and PFHQ ’ s various playbooks and checklists say about de-identification , franchisees also should consider what is likely to happen to the space once they leave . If the landlord ( or a new tenant ) is fully remodeling the space and changing its use , then , perhaps , the franchisee ( with PFHQ ’ s approval , if required ) might be able avoid taking some of the de-identification steps . For example , if the space is going to be fully transformed from a gym to a grocery store , then perhaps some of the time and expense associated with de-identification can be avoided ( or done by a third party ). On the other hand , if the franchisee believes a competitor in the fitness industry may be leasing the space , then the franchisee may want to perform more de-identification than is required in order to make it difficult on the competitor to use the Planet Fitness brand . For example , if a lease allows the franchisee to remove leasehold improvements made by the franchisee , the franchisee might consider whether it makes sense to remove locker rooms or other improvements a competitor might find useful . Either way , franchisees should ensure they are complying with the obligations under the lease ( in addition to those under the franchise agreement ).
In closing ( pun intended ), franchisees need to be mindful that the process of closing a club does not ( or at least it should not !) happen overnight . Instead , the process of closing a club takes advance planning and involves satisfying a substantial number of obligations owed to a substantial number of stakeholders , both before and after the actual date of closing . As a result , franchisees who find themselves considering the closure of a club should , at the earliest stage possible , begin identifying the steps they will need to take and when they will need to take them in order to make the process of closing a club as painless as possible .
If any franchisee has a question about their closure rights , or any other issue related to their franchise agreement or relationship with PFHQ , please feel free to reach out to me or any member of the PFIFC Board of Directors . Otherwise , I hope you are all healthy , safe , and that your businesses are open ! G
J . Mark Dady is an attorney and the Managing Partner of Dady & Gardner , P . A . His practice is focused on the representation of franchisees , dealers , and distributors located throughout the United States . For more information on Mark Dady and Dady & Gardner , P . A ., please visit www . dadygardner . com ; call 612-359-5488 ; or send an email to mdady @ dadygardner . com .
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GearedUp | 2020 Issue 4
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