Who is required to sign the Fitstop franchise agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Each of your principal owners and their spouse must sign the franchise agreement as either (a) the franchisee under the Franchise Agreement itself, or (b) a guarantor under the form of personal guaranty attached to said agreement. In either event, by signing the franchise agreement each franchisee owner and their respective spouse(s), as applicable, agree to perform, and guarantees, all the franchisee's obligation to us and our affiliates (including the obligations under this Agreement) and agrees to be bound by the restrictive covenants, the confidentiality provisions and certain other provisions contained in the Franchise Agreement.
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, the franchise agreement must be signed by each principal owner of the franchise and their spouse. These individuals can sign either as the franchisee or as a guarantor. Regardless of the capacity in which they sign, all principal owners and their spouses agree to fulfill and guarantee the franchisee's obligations to Fitstop and its affiliates. They also agree to adhere to the restrictive covenants and confidentiality provisions outlined in the Franchise Agreement.
This requirement ensures that Fitstop has recourse to the personal assets of the owners and their spouses if the franchise entity fails to meet its financial or operational obligations. It also binds these individuals to the non-compete and confidentiality clauses, preventing them from using Fitstop's confidential information or competing with the brand, even if they are not directly involved in the day-to-day operations.
This is a fairly standard practice in franchising, as franchisors typically seek to secure the obligations of the business with personal guarantees from the owners. Prospective Fitstop franchisees should carefully review the personal guaranty and understand the full extent of their obligations before signing the Franchise Agreement. They should also consult with an attorney to fully understand the implications of signing as a guarantor.