What is the consequence if a Fitstop franchisee fails to comply with the provisions of the Right of First Refusal?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
irst Refusal, the Parties shall act expeditiously to complete the transfer, provided that the date for the completion of the transfer can be extended at our option for up to an additional 30 calendar days.
- 15.5 If there are any material changes in the terms and conditions of the proposed transfer after we notify you of our election not to exercise our Right of First Refusal, or after the expiration of the time period within which we can elect to exercise our right, you shall notify us of the changes in writing and we shall then have an additional 10 calendar days within which to elect to exercise our Right of First Refusal.
- 15.6 If the proposed transfer is not completed for any reason within 90 calendar days after we elect not to exercise or assign our Right of First Refusal, or after the expiration of the time allowed for such election, a new Right of First Refusal commences as to the concerned transaction and any subsequent proposed sales or transfers by you. You shall provide us with written notice of any proposed transfer and shall comply with the provisions of the Right of First Refusal.
- 15.7 Included with your notice of proposed transfer, unless exempted, shall be your nonrefundable Application Fee of $500 payable to us. The Application Fee will be credited toward the Transfer Fee, as defined above, if the transferee is approved but will otherwise be forfeited to defray our expenses in connection with processing the application. The Application Fee is subject to upward adjustment by any change in the Consumer Price Index
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a Fitstop franchisee fails to comply with the provisions of the Right of First Refusal, several consequences may arise. The franchisee is required to provide written notice to Fitstop of any proposed transfer and adhere to the Right of First Refusal provisions. If there are material changes to the transfer terms after Fitstop declines to exercise its right, the franchisee must notify Fitstop, granting them an additional 10 days to elect to exercise their Right of First Refusal.
If a proposed transfer is not completed within 90 calendar days after Fitstop declines to exercise its right, a new Right of First Refusal commences for any subsequent sales or transfers. Additionally, Fitstop retains the right to seek injunctive relief to enforce the provisions of the franchise agreement, which would include the Right of First Refusal. This means Fitstop could obtain a court order to prevent the franchisee from violating the agreement.
Furthermore, the franchisee may be responsible for Fitstop's legal costs if Fitstop has to take action to enforce its rights under the agreement. Failure to comply with the Right of First Refusal could, therefore, lead to legal action, financial penalties, and the potential prevention of the transfer. Involuntary transfers are not permitted and are grounds for termination of the agreement.