Are Fitstop franchisees entitled to a share of the proceeds from activities Fitstop reserves the right to conduct?

According to Fitstop's 2024 Franchise Disclosure Document, franchisees are generally not entitled to a share of the proceeds from activities that Fitstop reserves the right to conduct. Fitstop retains specific rights, including establishing and operating other franchised businesses, marketing similar products under different trademarks, and distributing approved products through alternative channels, both within and outside a franchisee's designated territory. They also reserve the right to operate System Businesses within Non-Traditional Venues located with your Designated Territory. These rights allow Fitstop to explore various business avenues without necessarily compensating franchisees.

This policy has significant implications for prospective Fitstop franchisees. It means that Fitstop can engage in activities that might compete with a franchisee's business without sharing any of the resulting revenue. For example, Fitstop could establish an online sales platform or partner with a "big box" gym within a franchisee's territory, capturing potential customers and revenue that the franchisee would not benefit from directly. This lack of revenue sharing could affect a franchisee's profitability and return on investment.

It is important for potential Fitstop franchisees to understand that their Franchise Agreement does not grant them the right to engage in these reserved activities or to share in any proceeds derived from them, unless Fitstop agrees otherwise in writing. While franchisees are not required to pay additional consideration for accepting clientele from outside their Designated Territory, provided all Approved Services and revenue is generated at and from the approved Premises, this does not extend to the activities Fitstop reserves for itself. Franchisees should carefully consider the potential impact of these reserved rights on their business and discuss any concerns with Fitstop before signing the Franchise Agreement. Understanding the scope of these reserved rights is crucial for assessing the potential risks and rewards of investing in a Fitstop franchise.