Can the Fitstop franchisee transfer any rights under the Franchise Agreement without Fitstop's written consent?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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 generally cannot transfer any rights under the Franchise Agreement without the prior written consent of Fitstop. Specifically, if a franchisee attempts to transfer the agreement, ownership, or any rights without obtaining Fitstop's written consent, it constitutes a material breach of the agreement, rendering the transfer void. This requirement ensures that Fitstop maintains control over who operates a franchise and upholds brand standards.
However, there are 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 owners does not require Fitstop's approval, nor does it require the payment of application or transfer fees. The transferring owner(s) must still agree to remain personally responsible for the performance of the terms and conditions of the agreement. Additionally, the transfer of the franchise by an individual to a corporation in which they remain the majority stockholder and officer responsible for the full-time operation of the franchise only incurs the application fee without the transfer fee, provided the transfer does not result in the cumulative transfer of over 50% of the original owner's interests.
Furthermore, transfers may occur due to legal proceedings such as divorce. If a court orders the transfer of interest in the agreement or property to a spouse, it is considered a transfer of the agreement, subjecting both parties to the transfer terms. However, if both spouses are already franchisees, the transfer requirements do not apply unless the spouse receiving the interest is not actively engaged in the franchise operation, in which case Fitstop can enforce the transfer terms and exercise its right of first refusal. These stipulations ensure that transfers, even those mandated by legal proceedings, align with Fitstop's operational standards and protect its interests.