What is the effect of the proposed transferee extending credit or financing terms to the seller of a Fitstop franchise?
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 Fitstop's 2024 Franchise Disclosure Document, if a proposed transferee is extending credit or financing terms to the seller, the seller must notify Fitstop in writing of these terms. Specifically, Fitstop requires written notification of the terms and conditions of any proposed transfer, including any credit or financing terms being extended by the seller.
Along with the notification, the seller must provide Fitstop with copies of all contracts, agreements, memoranda of sale, deposit receipts, letters of intent, and side letter agreements as soon as they are signed. This allows Fitstop to fully understand the financial arrangements of the transfer.
Upon receiving all required data and documents, Fitstop has 30 calendar days to decide whether to exercise its Right of First Refusal. This means Fitstop can choose to have the interest assigned to themselves or a third party they designate, provided the third party guarantees payments to the selling entity, based on the terms agreed to by the prospective transferee. This Right of First Refusal allows Fitstop to control who becomes a franchisee and ensures the financial stability of the transfer.