What does the Fitstop agreement say about 'exclusive,' 'protected,' or other territorial rights?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.2 Territorial Rights within Designated Territory; Related Rights and Limitations. During the term of this Agreement, we will not open or operate, or license any third party the right to open or operate, another System Business under the Proprietary Marks from a physical location within the Designated Territory.
The territorial rights in this Section 2.2 shall be subject to our reserved rights detailed below in this Section.
You may accept business and inquiries from prospective and existing members and customers (each, a "Member") via your Franchised Business, provided you: (i) only provide the Approved Services and Approved Products at and from the Premises, unless we agree otherwise in a separately-signed agreement; and (ii) do not market the Franchised Business or otherwise solicit any potential customers or members outside of your Designated Territory.
- 2.3 Reservation of Rights.
Notwithstanding anything contained in this Agreement, we and/or our affiliates hereby reserve the exclusive right to: (i) establish and operate, and license any third party the right to establish and operate, other System Businesses using the Proprietary Marks at any location outside of the Designated Territory; (ii) market, offer and sell products and services that are similar to the products and services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Proprietary Marks and System, other such marks we may designate, to distribute the Approved Products in any alternative channel of distribution, within or outside the Designated Territory (including the Internet, mail order, catalog sales, toll-free numbers, wholesale stores, etc.); (iv) to acquire, merge with, or otherwise affiliate with, and after that own and operate, and franchise or license others to own and operate, any business of any kind, including, without limitation, any business that offers products or services the same as or similar to the Approved Products and/or Approved Services (but under different marks), within or outside the Designated Territory; (v) use the Proprietary Marks and System, and license others to use the Proprietary Marks and System, to engage in any other activities not expressly prohibited in this Agreement and; and (vi) own and operate, or license third parties the right to own or operate, a System Business from a premises that is located within a "Non-Traditional Venue" that is any captive venue or comparable location, including without limitation, academic institutions, military bases, hotels and/or other resorts, "big box" gyms, corporate office buildings and/or complexes, sports arenas and stadia, train stations, casinos and/or other comparable venues, both within or outside the Designated Territory.
- 2.4 No Additional Franchises and/or Franchise Rights. Unless we agree otherwise in a form of addendum to this Agreement, you are not entitled to any right or option to develop any additional Franchises at any location other than the Franchised Business.
During the Term, you may, by written notice to us request our approval for you to open one or more additional franchises in your Designated Territory, but we are under no obligation to award you the same.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is granted the right to operate a Fitstop business from a specific, approved location and to market within a designated territory. Fitstop assures franchisees that, during the agreement's term, it will not operate or license others to operate a competing Fitstop business under its trademarks from a physical location within the franchisee's designated territory.
However, these territorial rights are subject to certain reservations. Fitstop retains the right to operate or license others to operate Fitstop businesses outside the franchisee's designated territory. They can also market and sell similar products and services under different trademarks anywhere, including within the franchisee's territory. Additionally, Fitstop can distribute approved products through alternative channels like the internet or wholesale, regardless of the franchisee's designated territory.
Fitstop also reserves the right to engage in business activities not expressly prohibited in the agreement and to operate or license others to operate a Fitstop business from non-traditional venues such as academic institutions, military bases, hotels, gyms, or corporate buildings, even within a franchisee's designated territory. Unless otherwise agreed, franchisees are not entitled to develop additional Fitstop franchises beyond their initial location, and while they can request approval to open more franchises within their territory, Fitstop is not obligated to grant it.