What is the Fitstop franchisee agreeing to when signing the agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
our Franchised Business during the term hereof.
- 1.5 The Parties and any third party body which the Parties may call upon to interpret this Agreement shall interpret the provisions of this Agreement to give effect to the intent of this Agreement to strictly adhere to and act in conformity with the System, as it now exists and as we may modify them from time to time via the Manuals or other prior written notice.
Section 2: Franchise Award; Premises and Designated Territory
©2024 Fitstop USA, Inc. 2.1 Franchise Award; Approved Premises. We award you the right, and you undertake and accept the obligation, to independently own and operate the Franchised Business from the location you propose, we approve and you secure in accordance with the terms of this Agreement (the "Premises"). You
acknowledge that the rights granted in this Agreement only award you the right to: (i) operate the Franchised Business in accordance with our System standards and specifications from the specific Premises that we approve in writing; and (ii) market, advertise and promote the Franchised Business within the geographical area we designate in Schedule 2 to this Agreement (your "Designated Territory"). The Premises, once approved by us and secured by you, will be set forth in the Data Sheet attached as Schedule 1 to this Agreement (the "Data Sheet").
- 2.2 Territorial Rights within Designated Territory; Related Rights and Limitations. During the term of this Agreement, we will not open or operate, or license any third party the right to open or operate, another System Business under the Proprietary Marks from a physical location within the Designated Territory. The territorial rights in this Section 2.2 shall be subject to our reserved rights detailed below in this Section. You may accept business and inquiries from prospective and existing members and customers (each, a "Member") via your Franchised Business, provided you: (i) only provide the Approved Services and Approved Products at and from the Premises, unless we agree otherwise in a separately-signed agreement; and (ii) do not market the Franchised Business or otherwise solicit any potential customers or members outside of your Designated Territory.
- 2.3 Reservation of Rights. Notwithstanding anything contained in this Agreement, we and/or our affiliates hereby reserve the exclusive right to: (i) establish and operate, and license any third party the right to establish and operate, other System Businesses using the Proprietary Marks at any location outside of the Designated Territory; (ii) market, offer and sell products and services that are similar to the products and services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Proprietary Marks and System, other such marks we may designate, to distribute the Approved Products in any alternative channel of distribution, within or outside the Designated Territory (including the Internet, mail order, catalog sales, toll-free numbers, wholesale stores, etc.); (iv) to acquire, merge with, or otherwise affiliate with, and after that own and operate, and franchise or license others to own and operate, any business of any kind, including, without limitation, any business that offers products or services the same as or similar to the Approved Products and/or Approved Services (but under different marks), within or outside the Designated Territory; (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 this Agreement and; and (vi) own and operate, or license third parties the right to own or operate, a System Business from a premises that is located within a "Non-Traditional Venue" that is any captive venue or comparable location, including without limitation, academic institutions, military bases, hotels and/or other resorts, "big box" gyms, corporate office buildings and/or complexes, sports arenas and stadia, train stations, casinos and/or other comparable venues, both within or outside the Designated Territory.
- 2.4 No Additional Franchises and/or Franchise Rights. Unless we agree otherwise in a form of addendum to this Agreement, you are not entitled to any right or option to develop any additional Franchises at any location other than the Franchised Business. During the Term, you may, by written notice to us request our approval for you to open one or more additional franchises in your Designated Territory, but we are under no obligation to award you the same.
- 2.5 Initial Term. The term of this Agreement shall begin on the date that the Parties fully execute this Agreement (the "Effective Date") and continue for a period of 10 years thereafter (the "Term"), unless terminated by us at an earlier date in accordance with the terms of this Agreement.
2.6 Initial Franchise Fee. You must pay us an initial franchise fee amounting to $50,000 (the "Initial Franchise Fee") immediately upon execution of this Agreement, which is deemed full earned by us and non-refundable upon payment.
Section 3: Proprietary Marks and System Intellectual Property
- 3.1 We have a license to use, and license System Business owners the right to use, the Proprietary Marks and other intellectual property associated with our Franchise System (collectively, the "Marks and IP").
- 3.2 You agree that you must use our Marks and IP strictly in compliance with this Agreement, Franchise System and Manual (s), as we may update, supplement and/or otherwise modify in writing as we determine appropriate from time to time.
- 3.3 You shall take no action which will interfere with any of our Marks and IP.
- 3.4 You shall not make an application for registration or other protection of any of our Marks and IP, and/or any item or items similar thereto, without our prior written consent.
- 3.5 You shall not contest our ownership of, nor the legal validity of any Mark and/or IP we determine to license or otherwise associate with the Franchise System and provide you with access to under the Agreement at any time during the Term hereof;
- 3.6 You shall immediately notify us of any claim of infringement resulting from any use of the Marks and IP. We have sole discretion as to what action to take, if any, regarding such matters. If we elect to take legal or administrative action in any such matter, you promise to join as a party to such action, or to allow us to bring the action solely in the name of your Franchised Business, but only as and if we so direct. In any such event, we shall bear the legal fees and court costs of prosecuting or defending any such action.
- 3.7 We, in our sole discretion, may modify or discontinue the use of our name, symbols, designs, trademarks, service marks, and patents, or any item or items similar thereto. In such event, we will not reimburse you for the tangible out of pocket costs which you incur in connection with making the necessary changes in accordance with our directives and timetables.
- 3.8 You shall not use any name in the operation of the Franchised Business, other than those which we specifically authorize in writing.
- 3.9 All directory listings, letterhead, or any other visual or printed matter that you use to communicate with anyone shall conform to our brand standards and the Manual(s).
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, when signing the franchise agreement, the franchisee agrees to several obligations and grants certain rights to Fitstop. The franchisee is awarded the right, and accepts the obligation, to independently own and operate the Franchised Business from a location that Fitstop approves. This includes operating the business according to Fitstop's System standards and specifications, and marketing the business within a designated territory. Fitstop retains the right to modify the System from time to time via manuals or other written notice.
The agreement specifies that Fitstop will not open or license another System Business within the franchisee's designated territory during the term of the agreement. However, this is subject to Fitstop's reserved rights. The franchisee can accept business from members, but must provide services and products at the approved premises, unless otherwise agreed in writing, and cannot market outside their designated territory. The franchisee also acknowledges that they have the power and authority to operate the Franchised Business and are duly licensed and qualified to transact business.
Furthermore, the franchisee agrees to devote full time and best efforts to the operation of the franchise, keeping it free from conflicting enterprises. The franchisee acknowledges that Fitstop has not made any promises regarding sales volumes, profits, or likelihood of success, except as set forth in the agreement. It is the franchisee's responsibility to ensure all promises are in writing within the agreement, as Fitstop is relying on the franchisee to document all material representations. The agreement awards the right to open a single Franchised Business within the Designated Territory.
In terms of dispute resolution, the franchisee agrees to first bring any claim or dispute to Fitstop's management and make commercially reasonable efforts to settle the dispute internally before pursuing mediation or other legal actions. Fitstop has the right to seek injunctive relief for violations of intellectual property rights, restrictive covenants, or payment obligations. The franchisee acknowledges that violating certain terms of the agreement could cause irreparable harm to Fitstop, entitling Fitstop to seek injunctive relief. The franchisee also acknowledges that Fitstop has the right to reduce the scope of any covenant without the franchisee's consent, effective immediately upon written notice.