Is a Fitstop franchisee allowed to assign or transfer any interest in their Franchise without Fitstop's written consent?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
ension of this Agreement based on your position as a non-authorized holdover franchisee, which may be terminated by Franchisor at any time upon 30 days' prior written notice.
Section 15: Assignment of Franchise
- 15.1 This Agreement is fully assignable by us. You shall not assign or otherwise transfer in whole or in part (whether voluntarily or by operation of law), directly, indirectly, or contingently any interest in this Franchise without our express written consent, and then only in accordance with the express limitations of this Section.
- 15.2 You shall pay an Assignment/Transfer Application Fee ("Application Fee") of $500.00 to us per application to assign or transfer and then upon approval, you, or if agreed upon between the parties, the subsequent franchisee must pay the Assignment/Transfer Fee ("Transfer Fee") of $25,000.00 before or at the time of transfer or assignment to a new franchisee.
- 15.3 You shall notify us in writing of the terms and conditions of any proposed transfer, including, but not limited to the interest proposed to be transferred, the purchase price or other consideration to be received therefore, any credit or financing terms being extended by the seller, the date of the proposed transfer, and all other pertinent provisions of the proposed transfer. In addition, a copy of any and all contracts, agreements, memoranda of sale, deposit receipts, letters of intent, side letter agreements and/or the like, must also be forwarded to us as soon as signed by the proposed seller. Following receipt of all pertinent data and documents concerning the proposed transfer, including any additional information concerning the transaction requested by us to you, we have 30 calendar days within which to advise you in writing of our election to have the interest proposed to be transferred assigned to us, or to a third party we may designate so long as it guarantees payments due to the selling entity, on the terms and conditions agreed to by the prospective transferee ("Right of First Refusal").
- 15.4 If we elect to exercise, or to assign under payment guarantee, the Right of
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is generally prohibited from assigning or transferring any interest in their franchise without the express written consent of Fitstop. This requirement applies to any transfer, whether it's voluntary or occurs by operation of law, and covers both direct and indirect transfers. This provision ensures that Fitstop maintains control over who operates a Fitstop franchise and upholds brand standards.
To initiate a transfer, the franchisee must provide Fitstop with written notice detailing all terms and conditions of the proposed transfer. This includes the interest being transferred, the purchase price, financing terms, the proposed transfer date, and all related contracts and agreements. Upon receiving this information, Fitstop has 30 calendar days to exercise its Right of First Refusal, allowing them to either take over the franchise interest themselves or assign it to a third party under the same terms agreed upon by the prospective transferee. Fitstop can extend the completion date of the transfer by up to an additional 30 calendar days.
There are specific conditions under which Fitstop will approve a transfer. These include the franchisee being in full compliance with the Franchise Agreement, payment of all outstanding amounts due to Fitstop, satisfactory completion of the training program by the transferee and their general managers, execution of the then-current Franchise Agreement by the transferee, payment of the transfer fee, approval of all written agreements related to the transfer, provision of any additional required information, an agreement from the franchisee not to divert business, and the signing of a general release and other required documents. These conditions are designed to protect Fitstop's interests and ensure the continued success of the franchise system.
In cases of death, legal incompetence, or divorce, transfers are still subject to Fitstop's conditions and requirements. Transfers to a spouse or adult child are permitted, but they require Fitstop's approval, payment of application, transfer, and training fees, and the transferee's execution of the current Franchise Agreement. However, transfer fees are waived if the transfer is to a named beneficiary, spouse, or adult child. Fitstop retains the right to terminate the Franchise Agreement if an approved transfer is not completed within 180 calendar days after the appointment of an executor or administrator.