Does Fitstop require franchisees to personally supervise the Franchised Business?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
We encourage but do not require you to personally supervise the Franchised Business and prefer to select Franchisees who favor and appear committed to a "hands on" and well-informed approach to the business. We strongly recommend that you devote a substantial amount of time to your franchised location, whether or not you engage a Designated Manager.
Franchisees who do not devote their full time and efforts to the establishment and operation of their franchised facilities may have lower Gross Revenue, higher operating costs and lesser name recognition in their areas than those franchisees who do devote their full efforts to the business. Examples of the types of functions which you might perform include supervision of employees, inventory checks, review of sales and costs, bookkeeping and all reasonable efforts to ensure smooth and efficient operations.
The Franchised Business must be directly supervised and managed by a person, identified to us who has undergone our training program. Based on his/her/their experience, we may choose to waive this requirement in our sole discretion. If you are not willing to be the full-time operator of your business, then you will be required to engage a manager and have them complete our training program (the "Designated Manager"). The Designated Manager is not required to hold an equity interest in the franchisee entity.
Any and all Designated Manager(s) must sign our then-current prescribed form of Confidentiality and Non-Competition Agreement. If and when a Designated Manager leaves his/her/their employment at your Franchised Business, you must recruit a new Designated Manager within thirty (30) days and submit the replacement's qualifications to us for our review and approval (which may be conditioned on completion of certain "Management Criteria") before substituting a new Designated Manager at any of your locations (unless you resume taking over the day-to-day operations of the Franchised Business on a full-time basis).
Your Franchised Business must always be managed and staffed with at least one (1) individual who has successfully completed the components of the Initial Training Program associated with being an owner/operator or, if appropriate, Designated Manager. In the event you develop more than one (1) System
franchise, you must have a properly trained Designated Manager at each Franchised Business you have the right to own and operate (but are not serving as its on-site manager).
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 40–41)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, while Fitstop encourages franchisees to personally supervise the Franchised Business, it does not mandate it. Fitstop states a preference for franchisees who are committed to a "hands on" approach. However, if a franchisee chooses not to be the full-time operator, they must engage a Designated Manager who completes Fitstop's training program.
This policy offers flexibility for prospective Fitstop franchisees. Franchisees who prefer to be actively involved in the day-to-day operations can do so. Alternatively, those who prefer a more hands-off approach can hire a Designated Manager to oversee the business. Fitstop does caution that franchisees who are not fully involved in their business may experience lower gross revenues, higher operating costs and lesser name recognition.
The Designated Manager must be identified to Fitstop and undergo their training program. The Designated Manager is not required to hold an equity interest in the franchisee entity. Any Designated Manager must sign Fitstop's Confidentiality and Non-Competition Agreement. If a Designated Manager leaves, the franchisee has thirty days to recruit a new Designated Manager, submit their qualifications for review and approval, and ensure they meet certain "Management Criteria" before they can take over the operations, unless the franchisee resumes full-time management themselves.
Fitstop requires that each franchise location is always managed and staffed with at least one individual who has successfully completed the Initial Training Program, whether that is the owner/operator or a Designated Manager. If a franchisee owns and operates more than one Fitstop location, they must have a properly trained Designated Manager at each location where they are not the on-site manager.