When must the Assignment/Transfer Fee be paid to Fitstop?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
or by operation of law), directly, indirectly, or contingently any interest in this Franchise without our express written consent, and then only in accordance with the express limitations of this Section.
- 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.
- 15.3 You shall notify us in writing of the terms and conditions of any proposed transfer, including, but not limited to the interest proposed to be transferred, the purchase price or other consideration to be received therefore, any credit or financing terms being extended by the seller, the date of the proposed transfer, and all other pertinent provisions of the proposed transfer.
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 the Assignment/Transfer Fee of $25,000 before or at the time of the transfer or assignment to a new franchisee. Prior to this, the franchisee must also pay a nonrefundable Application Fee of $500 when providing notice of a proposed transfer, unless exempted. This application fee is credited toward the Transfer Fee if the transferee is approved. However, the application fee will be forfeited to Fitstop to cover expenses if the transferee is not approved.
It is important to note that the Application Fee is subject to upward adjustment based on changes in the Consumer Price Index (CPI) between the date of the agreement and the date of the transfer. This means the initial $500 fee could increase over time due to inflation, adding to the overall cost of the transfer. The franchisee is responsible for understanding and accounting for this potential adjustment.
These fees are standard in franchising, as they compensate the franchisor for the administrative and legal work involved in reviewing and approving a transfer. The non-refundable application fee covers the initial costs of processing the application, while the transfer fee covers the finalization of the transfer process. Franchisees should factor these costs into their financial planning if they anticipate selling their Fitstop franchise in the future.
Fitstop also maintains a Right of First Refusal, allowing them to purchase the franchise on the same terms as the proposed transferee. If Fitstop chooses to exercise this right, the transfer process will proceed expeditiously. However, if there are material changes to the transfer terms after Fitstop declines to exercise its Right of First Refusal, the franchisee must notify Fitstop, which then has an additional 10 days to reconsider. If the transfer is not completed within 90 days after Fitstop declines its Right of First Refusal, a new Right of First Refusal commences for any subsequent proposed sales or transfers.