Can Fitstop condition approval of a new Designated Manager on completion of certain Management Criteria?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
If you are not willing to be the full-time operator of your business, then you will be required to engage a manager and have them complete our training program (the "Designated Manager"). The Designated Manager is not required to hold an equity interest in the franchisee entity.
Any and all Designated Manager(s) must sign our then-current prescribed form of Confidentiality and Non-Competition Agreement. If and when a Designated Manager leaves his/her/their employment at your Franchised Business, you must recruit a new Designated Manager within thirty (30) days and submit the replacement's qualifications to us for our review and approval (which may be conditioned on completion of certain "Management Criteria") before substituting a new Designated Manager at any of your locations (unless you resume taking over the day-to-day operations of the Franchised Business on a full-time basis).
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 40–41)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee is not the full-time operator of their business, they must engage a Designated Manager who completes Fitstop's training program. When a Designated Manager leaves, the franchisee has thirty days to recruit a replacement.
Fitstop requires the franchisee to submit the replacement's qualifications for review and approval. Fitstop may condition this approval on the completion of certain "Management Criteria" before the new Designated Manager can be substituted at any location. This condition does not apply if the franchisee resumes full-time, day-to-day operations of the Franchised Business.
This means that Fitstop retains control over who manages a franchise location if the franchisee is not directly involved. The franchisee needs to be aware that finding a suitable replacement manager and getting them approved by Fitstop could take time, potentially impacting the business's operations. It is important to understand what the "Management Criteria" entails to ensure a smooth transition when a Designated Manager needs to be replaced.