Can Fitstop license third parties to establish and operate other Franchised Businesses using the Marks and System at any location outside of your Designated Territory?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
We reserve all rights not expressly granted to you. These include the right to: (i) establish and operate, and license any third party the right to establish and operate, other Franchised Businesses using the Marks and System at any location outside of your Designated Territory; (ii) market, offer and sell products and services that are similar to the Approved Products and Approved Services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Marks and System, other such marks we designate, to distribute our Approved Products and/or Approved Services (including private label products that we may develop in the future) in any alternative or dissimilar channels of distribution, within or outside the Designated Territory (including by electronic means, such as the internet and by websites we establish, direct mail, wholesale stores, etc.); (iv) engage in any transaction, including to purchase or be purchased by, to merge or combine with, to convert to the System or be converted into a new system with any business, including such businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Designated Territory, provided that in such situations the newly acquired businesses may not operate under the Proprietary Marks in the Designated Territory; and (v) use the Proprietary Marks and System, and license others to use the Proprietary Marks and System, to engage in any other activities not expressly prohibited in your Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop retains specific rights regarding the operation and licensing of other Fitstop businesses. Fitstop reserves the right to license third parties to establish and operate other franchised businesses using Fitstop's marks and system at any location outside a franchisee's designated territory. This means that while a franchisee is granted a designated territory, Fitstop can authorize other franchisees or third parties to operate Fitstop businesses outside of that territory.
This reservation of rights also extends to other activities. Fitstop can market and sell similar products and services under different trademarks at any location, whether inside or outside the franchisee's designated territory. They can also use their marks and system to distribute approved products and services through various channels, including the internet, direct mail, and wholesale stores, without restriction to a franchisee's territory.
Furthermore, Fitstop reserves the right to engage in transactions such as mergers or acquisitions with any business, including competitors, regardless of location. They can also operate or license others to operate a Fitstop business in non-traditional venues like academic institutions, military bases, or airports. The Franchise Agreement explicitly states that franchisees do not have the right to engage in these activities or share in any proceeds from them, unless otherwise agreed in writing. Fitstop is not obligated to compensate franchisees for orders solicited or accepted inside their territory.
This aspect of the Fitstop franchise agreement is fairly standard. Franchisors typically retain broad rights to expand and develop their brand through various channels and locations, which may sometimes create competition for individual franchisees. Prospective franchisees should carefully consider these reserved rights and how they might impact their business before investing in a Fitstop franchise.