Is paying a transfer fee a condition for a Fitstop franchisee to transfer their franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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| 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.
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, paying a transfer fee is indeed a condition for a franchisee to transfer their franchise. The FDD outlines several conditions that must be met for Fitstop to approve a transfer.
These conditions include the franchisee being in full compliance with their Franchise Agreement, paying all outstanding amounts owed to Fitstop, and ensuring that the transferee and their managers satisfactorily complete Fitstop's training program. Additionally, the transferee must execute Fitstop's then-current form of Franchise Agreement, and either the franchisee or the transferee is responsible for paying the transfer fee.
Furthermore, Fitstop must approve any written agreements related to the transfer, and the franchisee must supply any additional information reasonably required by Fitstop. The franchisee must also 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.
However, the FDD also notes an exception: in the event of death or disability of the franchisee, if the transfer is to a family member, an administrative fee is charged instead of a transfer fee. This provides a degree of flexibility in specific circumstances.