factual

Does the Fitstop disclosure document include a state addendum?

Fitstop Franchise · 2024 FDD

Answer from 2024 FDD Document

bound legally by it. The person executing this General Release represents, with the signature below, that they are duly authorized | | Releasor: | Releasor: | | Signature | Signature | | Print Name/Date | Print Name/Date | | Releasor: | Releasor: | | Signature | Signature | | Print Name/Date | Print Name/Date |

EXHIBIT H: STATE-SPECIFIC ADDENDUM TO THE DISCLOSURE DOCUMENT

STATE ADDENDUM TO DISCLOSURE DOCUMENT

Notwithstanding anything to the contrary set forth in the Franchise Disclosure Document, the following provisions shall supersede and apply to all franchises offered and sold in the states identified below:

FOR THE STATE OF CALIFORNIA

Registration of this franchise does not constitute approval, recommendation, or endorsement by the Commissioner of the Department of Financial Protection and Innovation.

THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE DISCLOSURE DOCUMENT.

The California Corporations Code, Section 31125, requires that we give you a disclosure document, approved by the Department of Business Oversight, prior to solicitation of a proposed material modification of your Franchise Agreement.

OUR WEBSITES HAVE NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION. ANY COMPLAINTS CONCERNING THE CONTENTS OF THIS WEBSITE MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION AT www.dfpi.ca.gov.

Item 3 of the Disclosure Document is supplemented by the following:

  1. Neither the franchisor nor any person identified in Item 2 of the Disclosure Document is subject to any current effective order of any national securities association or national securities exchange as defined in the Securities Exchange Act of 1934, U.S.C.A., 78a et. seq., suspending or expelling such persons from membership in such association or exchange.

Item 5 of the Disclosure Document is supplemented by the following:

  1. The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.

Item 17 of the Disclosure Document is supplemented by the following:

    1. California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the Franchise Agreement contains a provision that is inconsistent with the law, the law will control.
    1. The Franchise Agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq).
    1. The Franchise Agreement contains a covenant not to solicit our customers or employees which extends beyond the termination of the franchise. This provision may not be enforceable under California law.

    1. You must sign a general release of claims if you renew or transfer your franchise. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 20010 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).
    1. California Corporations Code section 31512.1 prohibits a franchisor from disclaiming or denying representations made by the franchisor or its agents to a prospective franchisee or a franchisee's reliance on these representations, or disclaiming violations under the law, in any franchise disclosure document, franchise agreement, or related document. If the Franchise Disclosure Document, Franchise Agreement, or any related document or exhibit contains a provision that is inconsistent with the law, the law will control.

Source: Item 23 — RECEIPTS (FDD pages 50–135)

What This Means (2024 FDD)

Yes, the Fitstop 2024 Franchise Disclosure Document (FDD) includes a state-specific addendum. Exhibit H of the FDD is titled "STATE-SPECIFIC ADDENDUM TO THE DISCLOSURE DOCUMENT" and "STATE ADDENDUM TO DISCLOSURE DOCUMENT." This addendum contains provisions that supersede the standard terms of the FDD for franchises offered and sold in specific states.

The FDD includes specific addenda for California, Maryland, Illinois, Indiana, and Minnesota. For example, the addendum for California states that registration of the franchise does not constitute approval by the Commissioner of the Department of Financial Protection and Innovation. It also requires that a copy of all proposed agreements relating to the sale of the franchise be delivered with the disclosure document.

For Maryland, the addendum supplements Item 5, noting that the Maryland Attorney General's Office may require Fitstop to post a surety bond to guarantee pre-opening obligations. It also supplements Item 11, stating that franchisees can request an accounting of marketing fee expenditures for a $250 administrative fee. These state-specific addenda are crucial for prospective franchisees as they outline how state laws modify or supplement the standard franchise agreement, ensuring compliance and protecting franchisee rights within those states.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.