Is the Fitstop Designated Manager required to hold an equity interest in the franchisee entity?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchised Business must be directly supervised and managed by a person, identified to us who has undergone our training program. Based on his/her/their experience, we may choose to waive this requirement in our sole discretion. 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, a Designated Manager is not required to hold an equity interest in the franchisee entity. If a franchisee is not willing to be the full-time operator of the Fitstop business, they are required to engage a manager and have them complete Fitstop's training program.
This means that a Fitstop franchisee can hire a manager to oversee the daily operations of the business without having to give them ownership or shares in the company. This provides flexibility for franchisees who may not have the time or desire to be actively involved in the day-to-day management of the Fitstop location.
However, any Designated Manager must sign Fitstop's current Confidentiality and Non-Competition Agreement. If a Designated Manager leaves their employment, the franchisee must recruit a new Designated Manager within thirty (30) days and submit the replacement's qualifications to Fitstop for review and approval before substituting a new Designated Manager, unless the franchisee resumes taking over the day-to-day operations of the Franchised Business on a full-time basis.