If Fitstop exercises its option to purchase a Fitstop franchisee's business, will it be under the same terms the franchisee is offering to a third party?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| m. Conditions for franchisor approval of transfer | Section 15.11 | Conditions include: you must be in full compliance with your Franchise Agreement; you must pay us all amounts due; transferee and its managers must satisfactorily complete our training program; transferee executes our thencurrent form of Franchise Agreement; you or transferee must pay transfer fee; we must approve written agreements regarding transfer; you must supply us with any additional information we reasonably require regarding the transfer; you must 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/or our franchisees; and you must sign a general release and other documents we require. Please also see post-term covenants described below in this Item 17 Chart. |
|---|---|---|
| n Franchisor's might of first referri | Section 15.2 | We have a right to acquire your business and so the |
| n. Franchisor's right of first refusal to acquire franchisee's business | Section 13.2 | We have a right to acquire your business under the same terms you are offering to a third party. |
| o. Franchisor's option to purchase franchisee's business | Section 15.3 | You must notify us if y |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop has the option to purchase a franchisee's business under the same terms that the franchisee is offering to a third party. If a Fitstop franchisee plans to transfer their business to a third party, they must notify Fitstop. After receiving this notification, Fitstop will inform the franchisee whether it will purchase the business under the same terms being offered to the third party.
This clause in the Franchise Agreement protects Fitstop's interests by giving it the first opportunity to acquire a successful franchise location. It ensures that Fitstop can maintain control over its brand and operations by preventing the transfer of a franchise to an undesirable third party.
For a prospective Fitstop franchisee, this means that if they decide to sell their business, Fitstop has the right to step in and purchase it on the same terms offered by another potential buyer. This could be beneficial if the franchisee is looking for a quick and guaranteed sale. However, it also means that the franchisee may not be able to negotiate for better terms with another buyer if Fitstop decides to exercise its option.