factual

Is a Fitstop franchisee allowed to enter into a contract with or take payment directly from a customer without the franchisor's approval?

Fitstop Franchise · 2024 FDD

Answer from 2024 FDD Document

| d. Termination by franchisee | N/A | No early termination by you. | |--------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | e. Termination by franchisor without cause | N/A | No termination by us without cause. | | f. Termination by franchisor with cause | Section 16.1 | Franchisor can terminate if you are in breach of any term of the Franchise Agreement, if you are in default, if you fail to satisfactorily complete the Training, or if you fail to locate a Premises in the specified period of time. | | g. "Cause" defined—curable defaults | Section 16.2 | We can terminate you for engaging in conduct that reflects unfavorably on the operation and reputation of the Franchise System and if you fail to cure such default within 24 hours of our notice to you. The following defaults, if not cured within 30 calendar days after we have given you written notice, may result in termination: failure to comply with any provisions of the Franchise Agreement or other agreement between us and you; failure to pay any monies due us or suppliers when due; entering into a contract with or take payment directly from a customer without our approval; failing to submit required financial information to us or a government entity or making false statements about your financial statements to us or a government entity; failing to pay all taxes and employee related withholdings relating to the operation of your franchise; failing to keep your business entity active and in good |

| h. "Cause" defined—non-curable defaults | Section 16.1 | Non-curable defaults include being convicted of, pleading guilty or no contest to, or receiving deferred adjudication for a felony, crime of moral turpitude, or certain other crimes; attempts to hack or crack our computer software; disclosure of confidential information; abandonment; unauthorized transfer; material misrepresentations when you purchase the franchise; repeated failure to comply with Franchise Agreement or Manual requirements, even if corrected; or if you are declared insolvent or bankrupt.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)

What This Means (2024 FDD)

According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is not allowed to enter into a contract with or take payment directly from a customer without Fitstop's approval. Doing so can be grounds for termination of the franchise agreement.

Specifically, if a Fitstop franchisee engages in this behavior, it constitutes a breach of the Franchise Agreement. Fitstop can issue a written notice, and the franchisee will have 30 calendar days to correct the issue. If the franchisee fails to obtain approval or cease the unauthorized contracts and payments within that timeframe, Fitstop has the right to terminate the agreement.

This requirement ensures that all customer interactions and financial transactions align with Fitstop's standards and policies. It allows Fitstop to maintain control over the customer experience and revenue management across all franchise locations. Prospective franchisees should be aware of this restriction and ensure they have a system in place to obtain the necessary approvals from Fitstop before entering into any contracts or accepting payments directly from customers.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.