What conditions and requirements apply to all Fitstop franchise transfers?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
by a court of competent jurisdiction to be legally incompetent, the guardian of the concerned person who is appointed by the court may transfer the interest of the incompetent to the extent allowed by law. Your interest in this Agreement, including the interest of a partner in a partnership or the stock ownership of a shareholder in a corporation which owns you, is also transferable during your lifetime to a spouse or adult child of the transferor. 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.
- 15.12 Conditions for our approval of transfer include, but are not limited to, the following: (1) you are in full compliance with this Agreement; (2) you pay us all amounts due; (3) transferee and its general managers satisfactorily complete our training program, (4) transferee executes our then-current form of Franchise Agreement; (5) the transfer fee is paid; (6) we approve any written agreements regarding transfer; (7) you supply any additional information we require; (8) you provide, as a personal covenant to the transferee, in addition to your covenants to us, an agreement not to seek to divert business from us and our franchisees; and (9) you sign a general release and other documents we require.
- 15.13 If we do not approve a potential transferee who proposes to take this Franchise as a beneficiary under your will or by intestate succession, your estate may sell the Franchise to a third party transferee who is acceptable to us, provided that the sale and transfer take place within 180 calendar days after the appointment of the executor, administrator, or other personal representative of you, and subject to the terms of transfer herein, including our first right of refusal, which shall apply. If an approved transfer of this Agreement is not completed within said 180 calendar days, we have the right to terminate this Agreement. During any period following the death or declaration of incapacity of you, your estate must comply with the terms and conditions of this Agreement. Under no conditions will such compliance be excused or reduced because of the death or incapacity of you.
- 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. However, the transferring owner or owners must agree to remain personally responsible to us for your performance of the terms and conditions of this Agreement. The absence of any additional written agreements and/or guarantees concerning the transfer will not affect the continuing liability of the transferring owner or owners of this Franchise. We may impose similar requirements on any proposed transfer of this Franchise to a trust.
- 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.
- ©2024 Fitstop USA, Inc. 15.16 Involuntary transfers of this Agreement or the assets of the Franchise, such as by legal process, are not permitted, are not binding on us, and are grounds for the termination of this Agreement.
Your use of this Agreement as security for a loan or other similar encumbrance is prohibited, unless we specifically consent to any such action in writing prior to the proposed transaction. You shall not purport to grant a sub-franchise under this Agreement nor seek to franchise, license, or permit others to use this Franchise or any of the rights, assets, or property derived by or licensed to you under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, several conditions must be met for the approval of a franchise transfer. These conditions include being in full compliance with the Franchise Agreement, paying all outstanding amounts owed to Fitstop, and ensuring that the transferee and their general managers complete the Fitstop training program satisfactorily. The transferee must also execute the then-current form of the Franchise Agreement and pay the transfer fee.
Fitstop also requires approval of any written agreements related to the transfer and the provision of any additional information they may require. As a personal covenant to the transferee, the transferor must agree not to divert business from Fitstop and its franchisees. Finally, the transferor must sign a general release and any other documents Fitstop requires. These conditions ensure that any new franchisee meets Fitstop's standards and protects the brand's interests.
There are some exceptions to these general rules. For example, a transfer to a corporation wholly-owned by the existing owner(s) does not require Fitstop's approval or the payment of application or transfer fees, provided the transferring owner(s) remain personally responsible for the agreement's terms. Similarly, transfer fees are waived if the transfer is to a named beneficiary, spouse, or adult child. However, Fitstop retains the right to reasonably reject any transfer and may impose similar requirements on transfers to a trust. In cases of divorce or legal separation, court orders mandating the transfer of interest in the Franchise Agreement are subject to all transfer terms, unless both spouses are franchisees and the transferee spouse is actively engaged in the franchise operation.
Involuntary transfers, such as those resulting from legal processes, are not permitted and can be grounds for termination of the Franchise Agreement. Additionally, using the Franchise Agreement as security for a loan is prohibited without Fitstop's written consent. Upon any transfer, the prevailing fees (Royalty Fee, Marketing Fee, Technology Fee, Annual Convention Fee, etc.) will be adjusted to the then-current percentage required for new franchises. This adjustment could impact the profitability of the franchise for the new owner. It is important for prospective franchisees to understand all these conditions and requirements, as failure to comply can result in the transfer being denied or the Franchise Agreement being terminated.