What happens if a Fitstop franchisee is deemed legally incompetent by a court?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
If you or a shareholder or partner in you is determined by a court of competent jurisdiction to be legally incompetent, the guardian of the concerned person who is appointed by the court may transfer the interest of the incompetent to the extent allowed by law.
Your interest in this Agreement, including the interest of a partner in a partnership or the stock ownership of a shareholder in a corporation which owns you, is also transferable during your lifetime to a spouse or adult child of the transferor.
However, all such transfers are subject to our conditions and requirements regarding transfers as set forth herein, including, but not limited to, application, approval by us, payment of the application, transfer, and training fees, the transferee's execution of the then-current Franchise Agreement, and to our Right of First Refusal where applicable.
However, if the transfer is to a named beneficiary or to the spouse or an adult child of an individual, transfer fees are not payable.
15.12 Conditions for our approval of transfer include, but are not limited to, the following: (1) you are in full compliance with this Agreement; (2) you pay us all amounts due; (3) transferee and its general managers satisfactorily complete our training program, (4) transferee executes our then-current form of Franchise Agreement; (5) the transfer fee is paid; (6) we approve any written agreements regarding transfer; (7) you supply any additional information we require; (8) you provide, as a personal covenant to the transferee, in addition to your covenants to us, an agreement not to seek to divert business from us and our franchisees; and (9) you sign a general release and other documents we require.
15.13 If we do not approve a potential transferee who proposes to take this Franchise as a beneficiary under your will or by intestate succession, your estate may sell the Franchise to a third party transferee who is acceptable to us, provided that the sale and transfer take place within 180 calendar days after the appointment of the executor, administrator, or other personal representative of you, and subject to the terms of transfer herein, including our first right of refusal, which shall apply.
If an approved transfer of this Agreement is not completed within said 180 calendar days, we have the right to terminate this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee, shareholder, or partner is deemed legally incompetent by a court, the court-appointed guardian may transfer the incompetent person's interest to the extent permitted by law. This ensures that the business can continue operating even if the franchisee is unable to manage it themselves.
However, any such transfer is subject to Fitstop's standard conditions and requirements for transfers. These include application and approval by Fitstop, payment of application, transfer, and training fees, and the transferee's execution of the then-current Franchise Agreement. Fitstop also retains the Right of First Refusal, allowing them to purchase the franchise before it is sold to another party. If the transfer is to a named beneficiary, spouse, or adult child, transfer fees are waived.
Fitstop's conditions for approval include the franchisee being in full compliance with the agreement, paying all amounts due, and the transferee completing the training program. The transferee must also execute the current Franchise Agreement and provide an agreement not to divert business from Fitstop. These stipulations ensure that any new franchisee meets Fitstop's standards and is committed to maintaining the brand's integrity.
If Fitstop does not approve a potential transferee who is a beneficiary under the franchisee's will or by intestate succession, the estate has 180 calendar days to sell the franchise to a third party acceptable to Fitstop. This sale is subject to the terms of transfer, including Fitstop's right of first refusal. If an approved transfer is not completed within 180 days, Fitstop has the right to terminate the Franchise Agreement. This clause protects Fitstop's interests by ensuring that the franchise is transferred promptly and to a qualified operator.