What is the effect of a Fitstop franchisee failing to notify Fitstop of changes to the proposed transfer terms?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if there are any material changes to the terms of a proposed transfer after Fitstop has indicated it will not exercise its Right of First Refusal, the franchisee is required to notify Fitstop of these changes in writing. Upon notification, Fitstop then has an additional 10 calendar days to decide whether to exercise its Right of First Refusal.
If the franchisee fails to notify Fitstop of these material changes and the proposed transfer is not completed within 90 calendar days after Fitstop initially declined to exercise its Right of First Refusal, a new Right of First Refusal commences. This means that Fitstop has the right to review and approve any subsequent proposed sales or transfers by the franchisee as if it were a completely new transaction.
This clause is significant for prospective Fitstop franchisees because it emphasizes the importance of transparency and adherence to the transfer process outlined in the franchise agreement. Failure to comply with these notification requirements can lead to delays or complications in the transfer process, potentially jeopardizing the sale of the franchise. Franchisees should ensure they understand and follow the prescribed procedures for notifying Fitstop of any changes to the proposed transfer terms to avoid triggering a new Right of First Refusal.