If a Fitstop franchisee plans to transfer their business to a third party, what must they do?
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 you plan to transfer your business to a third party. After you notify us, we will notify you whether we will purchase your business under the same terms you are offering to a third party. |
| p. Death or disability of franchisee | Section 15.12 | Subject to transfer rules; however, an administrative fee, not a transfer fee, is charged if the transfer is to a family member. |
| q. Noncompetition covenants during the term of the franchise | Section 18.2 | You may not have an ownership interest in, financial interest in, or perform services for related businesses anywhere. You also must not divert or attempt to divert any business or customer from us or our franchisees, influence your previous customers or our other franchisees, injure our goodwill, or employ or solicit our employees subject to applicable noncompetition covenants, common law duties of good faith and fair dealing or other applicable business practice laws, and state law. |
| r. Noncompetition covenants after | Section 18.3 | For two years, you must not: divert or attempt to divert any business or customer from us or our franchisees or injure our goodwill; employ or solicit our employees; influence or attempt to influence your previous customers or other franchisees. You must not use the name "Fitstop" |
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, a franchisee must notify Fitstop if they plan to transfer their business to a third party. After notification, Fitstop will inform the franchisee whether they will purchase the business under the same terms offered to the third party.
If Fitstop does not exercise its right of first refusal, the franchisee can proceed with the transfer, subject to Fitstop's approval. To gain approval, the franchisee must be in full compliance with the Franchise Agreement and pay all outstanding amounts due to Fitstop. The proposed transferee and its managers must satisfactorily complete Fitstop's training program and execute the then-current form of the Franchise Agreement. Either the franchisee or the transferee must pay a transfer fee.
Fitstop must approve all written agreements regarding the transfer, and the franchisee must supply any additional information reasonably required by Fitstop. Additionally, the franchisee must provide a personal covenant to the transferee, agreeing not to divert business from Fitstop or its franchisees. Finally, the franchisee must sign a general release and any other documents required by Fitstop.