Can Fitstop assign its Franchise Agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.14 The transfer of this Franchise upon written notice by an individual or partnership to a corporation wholly-owned by the preexisting owner or all preexisting owners of this Franchise shall not require our approval nor the payment of the application or transfer fees.
However, the transferring owner or owners must agree to remain personally responsible to us for your performance of the terms and conditions of this Agreement.
The absence of any additional written agreements and/or guarantees concerning the transfer will not affect the continuing liability of the transferring owner or owners of this Franchise.
We may impose similar requirements on any proposed transfer of this Franchise to a trust.
- 15.15 If the transfer is an assignment of the Franchise by an individual to a corporation in which you are and, so long as they remain the majority stockholder and the officer responsible for the full-time personal operation and supervision of the Franchise, and the transfer does not result in the cumulative transfer of over 50% of the interest or interests of the original owner or owners, the Application Fee will be charged without the Transfer Fee.
However, we require that the transferor, or transferors and each of them, personally guarantee all obligations of the Franchise and reserve the right to reasonably reject such transfer.
- ©2024 Fitstop USA, Inc. 15.16 Involuntary transfers of this Agreement or the assets of the Franchise, such as by legal process, are not permitted, are not binding on us, and are grounds for the termination of this Agreement.
Your use of this Agreement as security for a loan or other similar encumbrance is prohibited, unless we specifically consent to any such action in writing prior to the proposed transaction. You shall not purport to grant a sub-franchise under this Agreement nor seek to franchise, license, or permit others to use this Franchise or any of the rights, assets, or property derived by or licensed to you under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the franchise agreement can be transferred under specific conditions.
The Fitstop franchise agreement outlines scenarios where transfers are permissible, such as transferring the franchise to a corporation wholly-owned by the existing owner(s). In this case, Fitstop's approval and associated transfer fees are not required, provided the transferring owner(s) remain personally responsible for fulfilling the agreement's terms. Fitstop may also impose similar requirements for transfers to a trust.
Additionally, if an individual franchisee transfers the franchise to a corporation where they remain the majority stockholder and are responsible for the full-time operation and supervision of the franchise, only the Application Fee will be charged without the Transfer Fee, as long as the transfer does not result in the cumulative transfer of over 50% of the interest of the original owners. However, Fitstop requires the transferor(s) to personally guarantee all obligations and reserves the right to reasonably reject such a transfer.
Involuntary transfers of the Fitstop agreement or franchise assets through legal processes are not permitted and can lead to termination of the agreement. Furthermore, using the agreement as security for a loan is prohibited without Fitstop's prior written consent. These stipulations protect Fitstop's interests and ensure that franchise operations adhere to their standards, even during ownership changes.