Can a Fitstop franchisee withhold payments to Fitstop based on alleged nonperformance?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 19.7 No Withholding of Payments.
You shall not withhold all or any part of any payment to us or any of our affiliates on the grounds of our alleged nonperformance or as an offset against any amount we or any of our affiliates allegedly may owe you under this Agreement or any related agreements.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee is not permitted to withhold payments from Fitstop based on alleged nonperformance.
Specifically, the FDD states that franchisees cannot withhold any part of a payment due to Fitstop or its affiliates, even if they believe Fitstop has not performed its obligations or owes them money. This means a franchisee cannot offset payments against any perceived debts or failures on Fitstop's part.
This clause is significant because it protects Fitstop's revenue stream, ensuring consistent payments regardless of a franchisee's dissatisfaction. However, it places the financial risk squarely on the franchisee, who must continue to pay fees even if they believe Fitstop is in breach of contract. The franchisee's recourse would be to pursue legal action to recover any damages, but they cannot simply stop paying Fitstop in the meantime. This is a fairly common clause in franchise agreements, designed to maintain cash flow for the franchisor and avoid payment disputes.