What happens if a Fitstop Designated Manager does not meet the 'Management Criteria'?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
If you are not willing to be the full-time operator of your business, then you will be required to engage a manager and have them complete our training program (the "Designated Manager"). The Designated Manager is not required to hold an equity interest in the franchisee entity.
Any and all Designated Manager(s) must sign our then-current prescribed form of Confidentiality and Non-Competition Agreement. If and when a Designated Manager leaves his/her/their employment at your Franchised Business, you must recruit a new Designated Manager within thirty (30) days and submit the replacement's qualifications to us for our review and approval (which may be conditioned on completion of certain "Management Criteria") before substituting a new Designated Manager at any of your locations (unless you resume taking over the day-to-day operations of the Franchised Business on a full-time basis).
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 40–41)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee is not the full-time operator of their business, they must engage a Designated Manager who completes Fitstop's training program. When a Designated Manager leaves, the franchisee has 30 days to recruit a replacement and submit their qualifications to Fitstop for review and approval. This approval may be conditional on the completion of certain "Management Criteria."
The FDD does not explicitly state what happens if the Designated Manager fails to meet the Management Criteria. However, it implies that Fitstop must approve the replacement manager before they can be substituted at any of the franchisee's locations. The only exception is if the franchisee resumes taking over the day-to-day operations on a full-time basis.
Therefore, if a Designated Manager does not meet the Management Criteria, the franchisee would likely need to find another candidate who does meet the criteria or have the franchisee take over the day-to-day operations themselves. A prospective franchisee should clarify with Fitstop the specific steps and consequences if a Designated Manager does not meet the Management Criteria to fully understand their obligations and potential operational disruptions.