In a Fitstop franchise transfer, what covenant must the transferee make to Fitstop regarding the non-compete agreement?

According to Fitstop's 2024 Franchise Disclosure Document, as part of the transfer conditions, the transferee must make a specific covenant to Fitstop regarding the non-compete agreement. Specifically, the transferee must covenant to Fitstop to enforce, and not waive, the non-compete agreement that was originally given to them by the transferor (the original franchisee). This ensures that the non-compete remains in effect even after the franchise changes ownership.

This requirement protects Fitstop's interests by preventing the original franchisee from circumventing the non-compete agreement through a transfer. It ensures that the new franchisee is committed to upholding the terms of the non-compete, maintaining the integrity of the franchise system and protecting Fitstop's market position.

For a prospective Fitstop franchisee, this means that if they are considering purchasing an existing franchise, they must be willing to enforce the non-compete agreement against the seller. This could involve legal action if the seller violates the agreement. It's a critical aspect to consider during due diligence, as it could have legal and financial implications for the new franchisee.