Does Fitstop have to agree in writing for a franchisee to share in any of the proceeds received by Fitstop, its affiliates or any third party from these activities?

According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is not entitled to share in any proceeds received by Fitstop, its affiliates, or any third party from activities that Fitstop reserves the right to conduct, unless Fitstop agrees to such sharing in writing. This means that Fitstop retains significant control over various revenue-generating activities, and franchisees have no inherent right to a portion of the income derived from these activities.

This provision covers a range of activities that Fitstop reserves the right to undertake, including establishing other franchised businesses outside the franchisee's designated territory, marketing similar products under different trademarks, and distributing approved products through alternative channels like the internet or wholesale stores. Fitstop also reserves the right to engage in transactions such as mergers or acquisitions with other businesses, even competitors, and to operate System Businesses in non-traditional venues like academic institutions or military bases.

The implication for prospective Fitstop franchisees is that their income is primarily limited to the revenue generated within their designated territory and through their approved premises. Franchisees should carefully consider the potential impact of Fitstop's reserved rights on their business and revenue prospects. It is important to understand the scope of these reserved rights and to assess the likelihood of Fitstop engaging in activities that could compete with or otherwise affect the franchisee's business.

In the franchise industry, it is common for franchisors to reserve certain rights to protect their brand and explore alternative revenue streams. However, the extent of these reserved rights can vary significantly. Prospective franchisees should carefully review the franchise agreement and disclosure documents to understand the specific rights retained by the franchisor and the potential impact on their business. It would be prudent for a potential Fitstop franchisee to seek clarification from Fitstop regarding the circumstances under which they might agree in writing to share proceeds from these reserved activities.