Can Fitstop engage in any transaction to convert to the System with any business operated by competitors?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
nchises.
Reserved Rights
We reserve all rights not expressly granted to you. These include the right to: (i) establish and operate, and license any third party the right to establish and operate, other Franchised Businesses using the Marks and System at any location outside of your Designated Territory; (ii) market, offer and sell products and services that are similar to the Approved Products and Approved Services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Marks and System, other such marks we designate, to distribute our Approved Products and/or Approved Services (including private label products that we may develop in the future) in any alternative or dissimilar channels of distribution, within or outside the Designated Territory (including by electronic means, such as the internet and by websites we establish, direct mail, wholesale stores, etc.); (iv) engage in any transaction, including to purchase or be purchased by, to merge or combine with, to convert to the System or be converted into a new system with any business, including such businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Designated Territory, provided that in such situations the newly acquired businesses may not operate under the Proprietary Marks in the Designated Territory; and (v) use the Proprietary Marks and System, and license others to use the Proprietary Marks and System, to engage in any other activities not expressly prohibited in your Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop retains the right to engage in various transactions with other businesses, including competitors. This means Fitstop can purchase, merge with, combine with, convert to the Fitstop system, or be converted into a new system with any business. This includes businesses operated by competitors, those operating independently, or those associated with another system or chain, regardless of whether they are franchised or corporately owned, and whether they are located inside or outside a franchisee's designated territory. However, these newly acquired businesses cannot operate under Fitstop's proprietary marks within the franchisee's designated territory. This reservation of rights is standard practice in franchising, allowing the franchisor to adapt and grow the brand.
This reserved right allows Fitstop to strategically expand and evolve its business model. For a franchisee, this means that while they are granted a designated territory, Fitstop can still make moves that impact the competitive landscape. The key protection for the franchisee is that any acquired businesses cannot operate under the Fitstop brand within their territory.
It is important for a prospective Fitstop franchisee to understand that Fitstop's reserved rights do not grant the franchisee any right to share in the proceeds from these activities, unless otherwise agreed in writing. Fitstop is also not obligated to compensate franchisees for soliciting or accepting orders inside their territory. This underscores the importance of carefully evaluating the designated territory and market conditions before investing in a Fitstop franchise.