What actions must a Fitstop franchisee take immediately upon termination or nonrenewal of the franchise agreement regarding Fitstop's Proprietary Marks?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| h. "Cause" defined—non-curable defaults | Section 16.1 | Non-curable defaults include being convicted of, pleading guilty or no contest to, or receiving deferred adjudication for a felony, crime of moral turpitude, or certain other crimes; attempts to hack or crack our computer software; disclosure of confidential information; abandonment; unauthorized transfer; material misrepresentations when you purchase the franchise; repeated failure to comply with Franchise Agreement or Manual requirements, even if corrected; or if you are declared insolvent or bankrupt. |
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| i. Franchisee's obligations on termination/nonrenewal | Section 16 | You must: (i) immediately cease use of all our Proprietary Marks, Confidential Information, trade secrets, and all aspects of the Franchise System; (ii) immediately return to us all advertising materials, products, or writing that contain, bear or otherwise use and of the Marks and IP, as well as all materials containing Confidential Information; (iii) pay all outstanding amounts due and owing to us under the Franchise Agreement; (iv) assign all telephone numbers and domain names associated with the Franchised Business to us (at our option) or otherwise cancel any registration for the same; (v) afford us (directly or via an operating affiliate) the right to (a) assume the lease for your Approved Premises, and/or (b) acquire all other operating assets associated with the Franchised Business at net depreciated book value, as detailed more fully in your Franchise Agreement; and (vi) comply with all confidentiality, non-disclosure and other post-term restrictive covenants detailed more fully below in this Item 17 Chart. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee faces several obligations upon termination or nonrenewal of the franchise agreement. Specifically, the franchisee must immediately cease all use of Fitstop's Proprietary Marks, Confidential Information, trade secrets, and all aspects of the Franchise System. This means the franchisee can no longer operate under the Fitstop brand or utilize any of its associated intellectual property. This is a standard practice in franchising, as the brand and its associated marks are the property of the franchisor.
In addition to ceasing use, the franchisee must immediately return to Fitstop all advertising materials, products, or writings that contain, bear, or otherwise use any of the Marks and IP, as well as all materials containing Confidential Information. This includes physical and digital materials. The franchisee is essentially required to purge all traces of the Fitstop brand from their business operations.
Furthermore, the franchisee is required to assign all telephone numbers and domain names associated with the Franchised Business to Fitstop (at Fitstop's option) or otherwise cancel any registration for the same. This ensures that customers cannot inadvertently contact the former franchisee thinking they are still connected to the Fitstop brand. These obligations are designed to protect Fitstop's brand identity and prevent any potential confusion or misuse of its intellectual property after the franchise agreement ends.