Does Fitstop require its express written consent for any transfer of interest in the Franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
sition as a non-authorized holdover franchisee, which may be terminated by Franchisor at any time upon 30 days' prior written notice.
Section 15: Assignment of Franchise
- 15.1 This Agreement is fully assignable by us. You shall not assign or otherwise transfer in whole or in part (whether voluntarily or by operation of law), directly, indirectly, or contingently any interest in this Franchise without our express written consent, and then only in accordance with the express limitations of this Section.
- 15.2 You shall pay an Assignment/Transfer Application Fee ("Application Fee") of $500.00 to us per application to assign or transfer and then upon approval, you, or if agreed upon between the parties, the subsequent franchisee must pay the Assignment/Transfer Fee ("Transfer Fee") of $25,000.00 before or at the time of transfer or assignment to a new franchisee.
- 15.3 You shall notify us in writing of the terms and conditions of any proposed transfer, including, but not limited to the interest proposed to be transferred, the purchase price or other consideration to be received therefore, any credit or financing terms being extended by the seller, the date of the proposed transfer, and all other pertinent provisions of the proposed transfer. In addition, a copy of any and all contracts, agreements, memoranda of sale, deposit receipts, letters of intent, side letter agreements and/or the like, must also be forwarded to us as soon as signed by the proposed seller. Following receipt of all pertinent data and documents concerning the proposed transfer, including any additional information concerning the transaction requested by us to you, we have 30 calendar days within which to advise you in writing of our election to have the interest proposed to be transferred ass
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees must obtain Fitstop's express written consent before transferring any interest in their franchise. This requirement applies to any transfer, whether voluntary or by operation of law, and includes direct, indirect, or contingent transfers.
Fitstop also outlines specific procedures and fees associated with the transfer process. Franchisees must notify Fitstop in writing of the terms of any proposed transfer, including the interest to be transferred, the purchase price, financing terms, and the proposed transfer date. A nonrefundable Application Fee of $500 is required with the transfer notice. Upon approval, a Transfer Fee of $25,000 is due before the transfer. Fitstop retains a Right of First Refusal, allowing them to either take over the franchise themselves or assign it to a third party under the same terms agreed upon with the prospective transferee.
There are a few exceptions to the transfer requirements. A transfer to a corporation wholly-owned by the existing owner(s) does not require Fitstop's approval or the payment of fees, provided the transferring owner(s) remain personally responsible for the franchise's performance. Similarly, a transfer to a spouse or adult child does not require transfer fees. However, all other conditions and requirements regarding transfers still apply, including Fitstop's approval and the transferee's execution of the current Franchise Agreement.
Failure to obtain Fitstop's prior written consent for any transfer, or attempting to transfer without adhering to the outlined procedures, constitutes a material breach of the Franchise Agreement and renders the transfer void. This strict control over franchise transfers allows Fitstop to maintain standards and ensure that new franchisees meet their criteria.