Can a Fitstop franchisee terminate the Franchise Agreement early?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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| 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. |
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| i. Franchisee's obligations on termination/nonrenewal | Section 16 | You must: (i) immediately cease use of all our Proprietary Marks, Confidential Information, trade secrets, and all aspects of the Franchise System; (ii) immediately return to us all advertising materials, products, or writing that contain, bear or otherwise use and of the Marks and IP, as well as all materials containing Confidential Information; |
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 permitted to terminate the Franchise Agreement early. The FDD states explicitly that there is "No early termination by you."
While Fitstop franchisees cannot voluntarily terminate the agreement early, Fitstop does reserve the right to terminate the agreement with cause under certain conditions. These conditions include breach of the Franchise Agreement, default, failure to complete training satisfactorily, or failure to secure a suitable premises within the specified timeframe. Certain defaults are curable within a specified time frame (typically 24 or 30 days after written notice), while others, such as criminal convictions or unauthorized disclosure of confidential information, are considered non-curable and can lead to immediate termination.
Upon termination, regardless of the reason, the Fitstop franchisee has several obligations. These include ceasing all use of Fitstop's proprietary marks and confidential information, returning all advertising materials, paying all outstanding amounts owed to Fitstop, and assigning all telephone numbers and domain names associated with the franchise to Fitstop. Fitstop also has the option to assume the lease for the premises and acquire all operating assets of the franchise at net depreciated book value. Furthermore, the franchisee must comply with all confidentiality, non-disclosure, and post-term restrictive covenants outlined in the Franchise Agreement, including non-compete clauses.