To what extent are transfer fees collectable from a Fitstop franchisee in Washington?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
FOR THE STATE OF WASHINGTON
Item 17 of the Disclosure Document is supplemented by the following:
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- RCW § 19.100.180 and court decisions may supersede the Franchise Agreement or Area Development Agreement in your relationship with us, including in the areas of termination and renewal of your Franchise Agreement or Area Development Agreement.
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- In the event of a conflict between the Washington Franchise Investment Protection Act and the law chosen in the Franchise Agreement or Area Development Agreement, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW, will prevail.
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- A release or waiver of rights executed by a franchisee will not include rights under the Washington Franchise Investment Protection Act, except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel.
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- Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act, such as a right to a jury trial, may not be enforceable in Washington.
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- Transfer fees are collectable to the extent that they reflect our reasonable estimated or actual costs in effecting a transfer.
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- In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration, or as determined by the arbitrator. In the event of a conflict of state laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall prevail.
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- Franchisee may have the right to terminate the franchise relationship should the franchisor fail to perform its duties or under applicable law
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, transfer fees are collectable from Fitstop franchisees in Washington, but only to the extent that they reflect Fitstop's reasonable estimated or actual costs in completing the transfer. This means that Fitstop cannot charge an arbitrarily high transfer fee; it must be tied to the actual expenses Fitstop incurs during the transfer process.
This provision is specific to Washington due to the Washington Franchise Investment Protection Act. This act aims to protect franchisees by ensuring that fees are fair and reasonable. A prospective Fitstop franchisee in Washington should be aware of this protection, as it could limit the amount they are required to pay in transfer fees compared to franchisees in other states.
It is important for a potential Fitstop franchisee in Washington to understand what costs Fitstop includes when calculating the transfer fee. They should request a detailed breakdown of these costs from Fitstop to ensure they align with the 'reasonable estimated or actual costs' standard. This transparency will help the franchisee assess the fairness of the fee and potentially negotiate if they believe it is excessive.