2017 Issue 1 | GearedUp |
In a perfect world, every Area Development Agreement( ADA) would contain an achievable and reasonable development schedule, and every developer would be able to meet or exceed the development schedule by identifying and securing A + sites for their franchises in a timely manner. Unfortunately, that is not always the case. Development schedules are not always achievable or reasonable, and developers are not always able to timely identify or secure the required number of sites( let alone A + sites) to meet their development schedules. Because the world is not perfect, it is important for those of you with ADAs to understand your rights and obligations in the event you fall behind on your development schedule and receive a default notice from PFHQ. To begin, developers in the Planet Fitness ® system generally fall into one of
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two categories:( 1) people with an ADA signed before the 2015 form came out( around April 10, 2015) who did not sign the MOU Side Letter for the ADA; and( 2) people who signed the MOU Side Letter for the ADA or, alternatively, have an ADA on the 2015 or newer standard form.
Pre-2015 ADA Form and No MOU Side Letter
For those of you who fall into the first category( i. e., a pre-2015 ADA form without the MOU Side Letter), the standard form of the pre-2015 ADA generally states that you only have 30 days to“ cure” after receiving a written default notice from PFHQ, with the cure being accomplished by opening and beginning to operate the required number of clubs. This means that, unless you are in a position to open the required number of clubs within 30 days of receiving the notice of default, you might
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be in a position where you cannot cure the default.
If you do not think you will be able to cure, one suggestion is to by Mark Dady reach out to PFHQ to see whether they would be willing to renegotiate the terms of your ADA and revise your development schedule to give you the additional time you need( and, if you would like, possibly add or subtract from the total development obligation and / or your assigned territory). If this is not possible, and you do not have any other leverage to convince PFHQ to give you additional time, termination of your ADA is a very real possibility.
Fortunately, however, the standard for a pre-2015 ADA generally states that the termination of the ADA will not
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