Can Fitstop license a third party to operate a System Business within a franchisee's Designated Territory?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Subject to our reserved rights set forth more fully below in this Item, we will not open or operate, or license any third party a license to own or operate, a System Business that operates under the Proprietary Marks from a premises that is physically located within your Designated Territory. You will be afforded this territorial right until such time that the Franchise Agreement governing the Designated Territory at issue expires or is terminated.
We also reserve the right to open and operate and/or license others the right to operate a System Business under the Proprietary Marks from a captive venue or other non-traditional location, including by way of example, academic institutions, military bases, "big box" gyms, hotels and/or airports (each, a "Non-Traditional Venue").
Your Franchise Agreement does not grant you any right to (a) engage in any of the activities outlined in the preceding paragraph, or (b) share in any of the proceeds received by us, our affiliates or any third party from these activities, unless we otherwise agree in writing. We have no obligation to provide you with any compensation for soliciting or accepting orders inside your territory.
Given we reserve the right to locate System Businesses within Non-Traditional Venues located with your Designated Territory, please note that we must disclose the following statement: Your territory is not exclusive. You may face competition from company-owned or other System franchisees.
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop can license a third party to operate a System Business within a franchisee's Designated Territory under specific circumstances. Generally, Fitstop will not license any third party to operate a System Business under its Proprietary Marks from a premises physically located within a franchisee's Designated Territory. This territorial right is maintained as long as the Franchise Agreement is active. However, this is subject to Fitstop's reserved rights.
Fitstop reserves the right to operate or license others to operate a System Business under the Proprietary Marks from a captive venue or non-traditional location, such as academic institutions, military bases, "big box" gyms, hotels, and airports, even within a franchisee's Designated Territory. This means that while a franchisee is generally protected from direct competition from another standard Fitstop franchise within their territory, Fitstop can still establish a presence through alternative venues.
It is important to note that Fitstop's franchise agreement does not grant franchisees the right to engage in activities reserved by Fitstop, nor does it entitle them to any proceeds from Fitstop's or third parties' activities in these reserved areas. Fitstop is also not obligated to compensate franchisees for soliciting or accepting orders inside their territory. Furthermore, the FDD states, "Your territory is not exclusive. You may face competition from company-owned or other System franchisees."
Prospective franchisees should carefully consider these reserved rights and the non-exclusive nature of the territory when evaluating the Fitstop franchise opportunity. Understanding the potential for competition from non-traditional venues and other channels is crucial for assessing the potential profitability and market dynamics of a Fitstop franchise.