What is the impact of misusing Fitstop's Proprietary Marks on the franchise agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
such failure is due to fire, flood, earthquake, or other force majeure.
- 16.1.3 If you have made any material misrepresentation relating to the acquisition of the Franchise or other rights awarded hereunder.
- 16.1.4 If you engage in (a) conduct that reflects materially and unfavorably upon the operation and/or reputation of the Franchise or the Franchise System or Proprietary Marks, or (b) other unfavorable conduct which may include, but is not necessarily limited to: any conviction of you or any of your Franchise Owners in a criminal action; judgments against you or your Franchise Owners in civil actions involving allegations of disrepute; libelliously denegrating us, the Franchise System, or your members; purposefully or negligently failing to pay royalties through inaccurate financial records; violating the non-compete provisions of this Agreement; you or your Franchise Owners being "under the influence" of drugs or alcohol while on-site at the Franchised Business; and/or misusing any of the Propreitary Marks, Confidential Information and/or proprietary System materials.
- 16.1.5 If you fail, for a period of 10 calendar days after notification of noncompliance, to comply with any federal, state, or local law or regulation applicable to the operation of the Franchise.
- 16.1.6 If the Franchise is seized, taken over, or foreclosed by a government official in the exercise of your duties, or is seized, taken over, or foreclosed by a creditor, lien holder, or lessor of you, provided that final judgment against you remains unsatisfied for 30 calendar days (unless a supersedes bond or other appeal bond has been filed), or a levy of execution has been made upon the Franchise granted by this Agreement or upon a material portion of the property used in the Franchise and the levy is not discharged within five (5) calendar days of the levy.
- 16.1.7 If we make a reasonable determination that continued operation of the Franchise by you will result in an imminent danger to public health or safety.
- 16.1.8 If you, after curing any failure as required by this Agreement and/or applicable law(s), as applicable, subsequently engage in the same noncompliance whether or not such noncompliance is corrected after notice.
- 16.1.9 If you hack or crack or attempt to hack or crack our computer software.
- 16.2 Termination Upon Notice and Failure to Cure. In addition to the grounds for immediate termination set forth above, we can terminate this Agreement for the following violations if the violation is not cured within 30 calendar days after we submit to you at the address indicated in the Franchise Summary a notice of violation:
- 16.2.1 If you fail to pay any fees or other amounts due to us, our affiliates or any Approved Supplier we designate within the time periods specified for such payments by this Agreement, or the agreement specifying the payment concerned, or in any event after receiving written notice that such fees or other amounts are overdue.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, misusing the Proprietary Marks can have significant consequences for a franchisee. Fitstop retains the right to seek injunctive relief in court, without needing to post a bond, to stop unauthorized use of the Proprietary Marks. This means Fitstop can quickly obtain court orders (restraining orders or temporary/permanent injunctions) to prevent a franchisee from misusing the brand's trademarks and other intellectual property.
Specifically, Fitstop does not have to attempt mediation if they allege a franchisee has violated or threatens to violate federally protected intellectual property rights in the Proprietary Marks. This allows Fitstop to immediately pursue legal action to protect its brand. The franchisee's only recourse if an injunction is issued is to attempt to dissolve the injunction by prevailing in a legal proceeding.
Furthermore, misusing the Proprietary Marks is grounds for termination of the franchise agreement. If a Fitstop franchisee misuses the Proprietary Marks, it is considered a breach of the agreement, and Fitstop can issue a notice of noncompliance. The franchisee typically has 30 calendar days to correct the misuse. However, misusing Proprietary Marks can also be considered conduct that reflects unfavorably on the operation or reputation of the Franchise System, which can lead to termination.