What are the circumstances under which a Fitstop franchisee might incur indemnification costs (Item 6), and how do these costs relate to the franchisee's obligations under the Franchise Agreement (Item 9)?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
OTHER FEES**
| Indemnification | The costs and expenses we incur in connection with your breach or default under your Franchise Agreement or otherwise in the ownership and operation of your Franchised Business. | As incurred by you. | You are solely responsible and must indemnify and hold us harmless for all loss, damage, claims or demands arising from your Franchise including, but not limited to, any joint employment claims. | |---|---|---|---| | Annual Convention Fee | We expect this amount to be around $1,500 to $2,000 per attendee | Paid monthly by you. | You will also be responsible for covering the costs that attendees incur in connection with attending any such event. | | Merchant payment processing costs | Then-current amount charged by our Approved Supplier (if applicable) Currently, these fees are estimated to be between 2% and 4% of Gross Revenue generated by your Franchised Business on an ongoing basis | Payable immediately once collected by the Current Billing/POS Provider | These amounts are payable to our third-party Approved Supplier for such services as of the Issue Date. | | Interest and/or Late Fees | The lesser of (i) 18% per annum, and (ii) the highest rate permitted for commercial transactions under applicable law | If and as incurred and invoiced | Please note that the maximum interest rate in the State of California amounts to 10% per annum. These amounts may be charged in connection with any fees or amounts that are past due and owing under the Franchise Agreement. |
| Training Fee(s) | Our then-current training fee for the type of training requested or other assistance/training requested by you and/or required under your Franchise Agreement (our "Training Fee") Currently, our Training Fee(s) are as follows: (i) $1,500 for the training that we provide and afford access to each individual that you wish to engage and appoint as an Authorized Instructor | On demand and as directed by us. | Please see Item 11 of this Disclosure Document for additional information. As previously noted in Item 1, as of the Issue Date we are willing to provide the System Instructor Training remotely to you and up to four (4) additional individuals that you determine to engage and wish to appoint as your initial Authorized Instructors of the Franchised Business, provided these individuals complete such training before undertaking or performing any Approved Services to any Franchised Business clientele.
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees may incur indemnification costs if they breach the Franchise Agreement or in connection with the ownership and operation of their Franchised Business. These costs cover expenses Fitstop incurs due to the franchisee's actions or omissions. The franchisee is solely responsible for indemnifying Fitstop against any losses, damages, claims, or demands arising from the franchise, including joint employment claims. This means a Fitstop franchisee could be financially liable for various issues stemming from their business operations.
Item 9 of the FDD outlines the franchisee's obligations as detailed in the Franchise Agreement. Section 17 of the Franchise Agreement, as referenced in Item 9, specifically addresses indemnification. This section makes the franchisee responsible for services performed at their location and requires them to hold Fitstop harmless from claims arising from the franchisee's actions, their members, or their employees. If Fitstop is subject to any claim, demand, penalty, suit, or proceeding due to a franchisee's act or omission, the franchisee will be responsible for covering the associated costs.
In practical terms, a Fitstop franchisee needs to ensure they operate their business in full compliance with the Franchise Agreement and all applicable laws. This includes proper management of employees, adherence to brand standards, and fulfillment of customer service obligations. Failure to meet these obligations could lead to claims or lawsuits for which the franchisee would be required to indemnify Fitstop, potentially resulting in significant financial burdens. Franchisees should carefully review Section 17 of the Franchise Agreement to fully understand the scope of their indemnification responsibilities and take proactive steps to mitigate potential risks.