Is Fitstop required to compensate a franchisee for soliciting or accepting orders inside the franchisee's designated territory?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
You are also prohibited from actively soliciting customers outside of your Designated Territory without our prior written consent. We are not required to pay you any compensation for soliciting or accepting orders inside your Designated Territory. Your Franchise Agreement does not provide you with any right of first refusal, option or any other rights to acquire additional franchises.
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop is not required to compensate a franchisee for soliciting or accepting orders inside the franchisee's designated territory. The FDD clearly states that franchisees will not receive compensation under these circumstances. This policy is explicitly outlined in Item 12, which addresses territory rights and restrictions.
This means that if Fitstop or another franchisee solicits or accepts orders from customers within your designated territory, Fitstop has no obligation to share any of the revenue generated from those sales with you. This is a crucial point for potential franchisees to understand, as it directly impacts revenue expectations and competitive dynamics within the Fitstop system.
This type of arrangement is not uncommon in franchising, where franchisors often retain the right to operate or allow others to operate within a franchisee's territory without compensation. Prospective franchisees should carefully consider the potential impact of this policy on their business and factor it into their financial projections. It is important to discuss this policy with Fitstop during the due diligence process to fully understand the implications.