What is the effect of Fitstop assigning its Right of First Refusal to a third party on the transfer process?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
15.4 If we elect to exercise, or to assign under payment guarantee, the Right of First 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.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if Fitstop chooses to assign its Right of First Refusal to a third party, the parties involved are expected to proceed with the transfer in an expeditious manner. However, Fitstop retains the option to extend the completion date of the transfer by up to an additional 30 calendar days. This means that while the transfer process should generally move quickly, Fitstop can delay the finalization if needed.
If there are any significant changes to the terms and conditions of the proposed transfer after Fitstop initially waives its Right of First Refusal, or after the period to exercise the right expires, the franchisee must inform Fitstop in writing. Following this notification, Fitstop has an additional 10 calendar days to decide whether to exercise its Right of First Refusal. This clause ensures that Fitstop has the opportunity to reassess the transfer if the terms change substantially.
Furthermore, if the transfer is not completed within 90 calendar days after Fitstop declines to exercise or assign its Right of First Refusal, or after the expiration of the election period, a new Right of First Refusal is triggered for any subsequent proposed sales or transfers. This provision prevents a franchisee from delaying a transfer indefinitely after Fitstop has passed on the opportunity, ensuring Fitstop retains control over future transfer attempts. The franchisee is required to provide written notice of any proposed transfer and must comply with all provisions related to the Right of First Refusal.