For California franchisees, when does Fitstop defer the collection of initial fees?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Item 5 of the Disclosure Document is supplemented by the following:
- The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the collection of initial fees from California franchisees is deferred until specific conditions are met. The California Commissioner has imposed a fee deferral because Fitstop has not demonstrated adequate capitalization or has shown reliance on franchise fees to fund operations. This means that Fitstop must wait to collect any initial fees from franchisees in California.
Specifically, Fitstop will defer collecting initial fees from California franchisees until all pre-opening obligations are completed and the franchisee is open for business. This protects the franchisee by ensuring that Fitstop fulfills its obligations before receiving payment.
For California franchisees who sign a development agreement, the payment of development and initial fees attributable to a specific unit in the development schedule is deferred until that specific unit is open. This provides additional financial flexibility for franchisees planning multiple Fitstop locations, as they do not have to pay the fees for future locations until those locations are operational.