In the event of relocation, does Fitstop require the franchisee to negotiate in good faith regarding the timing of entering into the new lease?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 9.9.3 The parties will negotiate and agree in good faith the time in relation to your entering into the lease in respect of the new Premises and relocating the Franchise (including the build-out of the new Premises in accordance with Franchise Agreement).
- 9.9.4 You acknowledge and agree that: (1) compliance with this section is at your sole cost and expense; (2) it is in the best interests of both parties that the Franchise be open for trade from the new Premises as soon as possible; and (3) subject to relevant laws, the new Premises are to be fitted out at your cost to conform with the then prevailing image and otherwise in accordance with this Section.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if relocation of the franchise is approved, both Fitstop and the franchisee are required to negotiate in good faith regarding the timing of entering into a new lease for the relocated premises. This includes agreeing on the timeline for relocating the franchise and completing the build-out of the new location.
This requirement ensures that both parties work together to facilitate a smooth transition to the new location. It acknowledges the importance of minimizing disruption to the Fitstop franchise's operations and maintaining business continuity. By mandating good faith negotiations, Fitstop aims to create a collaborative environment where the franchisee's needs and concerns are considered alongside the franchisor's interests.
However, the FDD also states that the franchisee is responsible for all costs associated with complying with the relocation, including the build-out of the new premises to conform to Fitstop's current image and standards. The franchisee also bears the costs of lease negotiations and amendments. This means that while Fitstop must negotiate in good faith, the franchisee ultimately bears the financial burden of the relocation process. Prospective franchisees should carefully consider these costs and ensure they have sufficient capital to cover potential relocation expenses.
This clause is fairly standard in franchise agreements, as it balances the franchisor's need to maintain brand standards and operational efficiency with the franchisee's investment and operational responsibilities. Franchisees should seek legal counsel to fully understand their obligations and rights in the event of a relocation.