What is the Assignment/Transfer Application Fee that a Fitstop franchisee must pay?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
15.2 You shall pay an Assignment/Transfer Application Fee ("Application Fee") of $500.00 to us per application to assign or transfer and then upon approval, you, or if agreed upon between the parties, the subsequent franchisee must pay the Assignment/Transfer Fee ("Transfer Fee") of $25,000.00 before or at the time of transfer or assignment to a new franchisee.
15.7 Included with your notice of proposed transfer, unless exempted, shall be your nonrefundable Application Fee of $500 payable to us.
The Application Fee will be credited toward the Transfer Fee, as defined above, if the transferee is approved but will otherwise be forfeited to defray our expenses in connection with processing the application.
The Application Fee is subject to upward adjustment by any change in the Consumer Price Index specified in this Agreement between its date and the date of the transfer.
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.
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.
However, all such transfers are subject to our conditions and requirements regarding transfers as set forth herein, including, but not limited to, application, approval by us, payment of the application, transfer, and training fees, the transferee's execution of the then-current Franchise Agreement, and to our Right of First Refusal where applicable.
However, if the transfer is to a named beneficiary or to the spouse or an adult child of an individual, transfer fees are not payable.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee must pay an Assignment/Transfer Application Fee of $500 when applying to assign or transfer their franchise. This fee is payable per application. Upon approval of the transfer, either the franchisee or the subsequent franchisee (as agreed upon by both parties) must also pay an Assignment/Transfer Fee of $25,000 before the transfer or assignment is finalized.
The $500 application fee is nonrefundable and is intended to cover Fitstop's expenses for processing the application. However, if the transfer is approved, the application fee will be credited towards the $25,000 transfer fee. The application fee amount is subject to potential upward adjustments based on changes in the Consumer Price Index from the date of the agreement to the date of the transfer.
There are some exceptions to these transfer fees. For example, if the franchise is transferred to a corporation wholly-owned by the existing owner(s), neither the application nor the transfer fees are required. Also, transfer fees are not payable if the transfer is to a named beneficiary, spouse, or adult child of an individual. However, the transferring owner(s) must remain personally responsible for the performance of the franchise agreement terms. Additionally, if the transfer is from an individual to a corporation where the individual remains the majority stockholder and officer responsible for the franchise's operation, only the Application Fee is charged, and not the Transfer Fee.