Does Fitstop have an obligation to pursue collections against delinquent members?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.10 Collection Rights. We have the right, but not the obligation, to pursue collections action against members.
We are not obligated to pursue collection matters at all or any further than we may choose.
If we make an assignment of the right to collect and enforce payment, you will pay all attorneys' fees, court costs, and expenses involved.
If you collect monies due on a delinquent member account, you will be responsible to us for any unpaid royalties, management fees, note payments, and other payments (if any) due on the amounts collected.
You must keep us advised of any legal or other proceedings which you institute, including the outcome of any proceedings.
- 13.11 Interest on Past Amounts Due. In the event that you are past due on the payment of any amount due to us under this Agreement, including accrued interest, you shall be required, to the extent permitted by law, to pay interest on the past due amount to us for the period beginning with the original due date for payment to the date of actual payment at an annual rate equal to the highest rate allowed by law or, if there is no maximum rate permitted by law, then 18% per annum.
Such interest will be calculated on the basis of monthly compounding and the actual number of days elapsed divided by 365.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop has the right, but not the obligation, to pursue collections action against members. Fitstop is not obligated to pursue collection matters at all or any further than they may choose. This means that the franchisee cannot rely on Fitstop to collect outstanding debts from members. The franchisee will need to manage member debt collection independently.
If Fitstop makes an assignment of the right to collect and enforce payment, the franchisee will pay all attorneys' fees, court costs, and expenses involved. If the franchisee collects monies due on a delinquent member account, the franchisee will be responsible to Fitstop for any unpaid royalties, management fees, note payments, and other payments (if any) due on the amounts collected. The franchisee must keep Fitstop advised of any legal or other proceedings which they institute, including the outcome of any proceedings.
In the event that the franchisee is past due on the payment of any amount due to Fitstop under the Franchise Agreement, including accrued interest, the franchisee shall be required, to the extent permitted by law, to pay interest on the past due amount to Fitstop for the period beginning with the original due date for payment to the date of actual payment at an annual rate equal to the highest rate allowed by law or, if there is no maximum rate permitted by law, then 18% per annum. Such interest will be calculated on the basis of monthly compounding and the actual number of days elapsed divided by 365.