Is a Fitstop franchisee allowed to transfer any interest in the Franchise without Fitstop's consent?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
- 15.14 The transfer of this Franchise upon written notice by an individual or partnership to a corporation wholly-owned by the preexisting owner or all preexisting owners of this Franchise shall not require our approval nor the payment of the application or transfer fees.
However, the transferring owner or owners must agree to remain personally responsible to us for your performance of the terms and conditions of this Agreement.
- 15.15 If the transfer is an assignment of the Franchise by an individual to a corporation in which you are and, so long as they remain the majority stockholder and the officer responsible for the full-time personal operation and supervision of the Franchise, and the transfer does not result in the cumulative transfer of over 50% of the interest or interests of the original owner or owners, the Application Fee will be charged without the Transfer Fee.
However, we require that the transferor, or transferors and each of them, personally guarantee all obligations of the Franchise and reserve the right to reasonably reject such transfer.
- 15.17 If a court of competent jurisdiction as a part of a divorce, dissolution, legal separation, or other proceeding, orders you to transfer to your spouse all or any part of your interest in this Agreement and/or in a material portion of the real and/or personal property used in connection with the Franchise, such an order will constitute a transfer of this Agreement and will cause the transferee amd transferor to be subject to all terms concerning transfers set forth above.
However, if both spouses are franchisees under this Agreement, such a transfer will not be subject to the transfer requirements herein, unless the spouse to whom this Agreement or the concerned property is being transferred is not actively engaged in the operation of the Franchise, in which case we can declare that the transfer is subject to all transfer terms of this Agreement and may exercise our right of first refusal.
- 15.20 If you purport to transfer this Agreement or ownership in Franchise, in whole or in part, or any of your rights hereunder, or any material portion of any of the real or personal property used by you in connection herewith, without the prior written consent of us, such action shall constitute a material breach of this Agreement and shall be void.
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 the franchise without the express written consent of Fitstop. This includes any direct, indirect, or contingent transfers, whether voluntary or by operation of law. Should a franchisee attempt to transfer the agreement or ownership of the franchise without prior written consent from Fitstop, it will constitute a material breach of the agreement and be considered void.
There are limited exceptions to this rule. A transfer of the franchise upon written notice by an individual or partnership to a corporation wholly-owned by the pre-existing owner(s) does not require Fitstop's approval, provided the transferring owner(s) remain personally responsible for the performance of the franchise agreement. Similarly, a transfer from an individual to a corporation where the individual remains the majority stockholder and officer responsible for the franchise's operation may only require the application fee, not the transfer fee, though Fitstop reserves the right to reasonably reject such a transfer.
In the event of a court order due to divorce or legal separation that mandates the transfer of interest in the agreement or property used in connection with the Fitstop franchise to a spouse, such an order will constitute a transfer and subject both parties to the transfer terms outlined in the agreement. However, if both spouses are already franchisees and actively engaged in the business, the transfer requirements may be waived unless the spouse receiving the interest is not actively involved, in which case Fitstop can enforce the standard transfer terms and exercise its right of first refusal. These stipulations ensure Fitstop maintains control over who operates its franchises and that any transfer meets their standards.