What is the consequence if a Fitstop franchisee does not notify Fitstop of the proposed transfer?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.3 You shall notify us in writing of the terms and conditions of any proposed transfer, including, but not limited to the interest proposed to be transferred, the purchase price or other consideration to be received therefore, any credit or financing terms being extended by the seller, the date of the proposed transfer, and all other pertinent provisions of the proposed transfer.
In addition, a copy of any and all contracts, agreements, memoranda of sale, deposit receipts, letters of intent, side letter agreements and/or the like, must also be forwarded to us as soon as signed by the proposed seller.
Following receipt of all pertinent data and documents concerning the proposed transfer, including any additional information concerning the transaction requested by us to you, we have 30 calendar days within which to advise you in writing of our election to have the interest proposed to be transferred assigned to us, or to a third party we may designate so long as it guarantees payments due to the selling entity, on the terms and conditions agreed to by the prospective transferee ("Right of First Refusal").
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to the 2024 Fitstop Franchise Disclosure Document, a franchisee is required to provide Fitstop with written notice of any proposed transfer of the franchise. This notification should include all terms and conditions of the proposed transfer, such as the interest being transferred, the purchase price, financing terms, the proposed transfer date, and all other relevant provisions. Additionally, the franchisee must provide copies of all contracts, agreements, sales memoranda, deposit receipts, letters of intent, and side letter agreements as soon as they are signed.
Following receipt of all necessary data and documents, Fitstop has 30 calendar days to decide whether to exercise its Right of First Refusal. This right allows Fitstop to have the interest assigned to them or to a third party they designate, provided that the third party guarantees payments to the selling entity, based on the terms agreed to by the prospective transferee.
If a Fitstop franchisee fails to provide the required written notice of a proposed transfer, it is implied that Fitstop would not be able to exercise its Right of First Refusal within the specified timeframe. While the FDD does not explicitly state the consequences of failing to provide notice, it is reasonable to assume that proceeding with a transfer without Fitstop's knowledge or approval would be a breach of the franchise agreement. This could potentially lead to termination of the agreement, as unauthorized transfers are generally prohibited and considered grounds for termination.