When is the application fee charged without additional fees for a Fitstop franchise assignment to a corporation where the franchisee remains the majority stockholder?

According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee transfers their Fitstop franchise to a corporation where they remain the majority stockholder and the officer responsible for the full-time personal operation and supervision of the franchise, Fitstop will charge the Application Fee but not the Transfer Fee. This is provided that the transfer does not result in the cumulative transfer of over 50% of the interest of the original owners.

However, Fitstop requires that the transferor(s) personally guarantee all obligations of the franchise. Fitstop also reserves the right to reasonably reject such a transfer, even if the franchisee meets the majority stockholder and operational requirements.

In practical terms, this means a Fitstop franchisee can incorporate their business without incurring the $25,000 Transfer Fee, but they will still have to pay the $500 Application Fee. They must maintain majority ownership and active management, and they must personally guarantee the corporation's obligations under the Franchise Agreement. This arrangement allows for some flexibility in business structure while ensuring Fitstop's interests are protected through the personal guarantee and operational oversight.