Does Fitstop reserve the right to engage in activities not expressly prohibited in the Franchise Agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 2.3 Reservation of Rights.
Notwithstanding anything contained in this Agreement, we and/or our affiliates hereby reserve the exclusive right to: (i) establish and operate, and license any third party the right to establish and operate, other System Businesses using the Proprietary Marks at any location outside of the Designated Territory; (ii) market, offer and sell products and services that are similar to the products and services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Proprietary Marks and System, other such marks we may designate, to distribute the Approved Products in any alternative channel of distribution, within or outside the Designated Territory (including the Internet, mail order, catalog sales, toll-free numbers, wholesale stores, etc.); (iv) to acquire, merge with, or otherwise affiliate with, and after that own and operate, and franchise or license others to own and operate, any business of any kind, including, without limitation, any business that offers products or services the same as or similar to the Approved Products and/or Approved Services (but under different marks), within or outside the Designated Territory; (v) use the Proprietary Marks and System, and license others to use the Proprietary Marks and System, to engage in any other activities not expressly prohibited in this Agreement and; and (vi) own and operate, or license third parties the right to own or operate, a System Business from a premises that is located within a "Non-Traditional Venue" that is any captive venue or comparable location, including without limitation, academic institutions, military bases, hotels and/or other resorts, "big box" gyms, corporate office buildings and/or complexes, sports arenas and stadia, train stations, casinos and/or other comparable venues, both within or outside the Designated Territory.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop reserves specific rights for itself and its affiliates. These rights allow Fitstop to engage in activities not explicitly prohibited within the Franchise Agreement.
Specifically, Fitstop can establish and operate Fitstop businesses outside a franchisee's designated territory. They can also market and sell similar products and services under different trademarks, regardless of location. Fitstop retains the right to use its trademarks and systems to distribute approved products through alternative channels like the Internet or wholesale stores, again without geographic limitations.
Furthermore, Fitstop can acquire, merge with, or affiliate with any business, even those offering similar products or services, under different trademarks, irrespective of location. They can also use their trademarks and systems and license them to others for activities not expressly prohibited in the agreement. Fitstop can operate or license others to operate a Fitstop business in non-traditional venues such as academic institutions, military bases, hotels, gyms or corporate buildings, both within or outside the Designated Territory. This reservation of rights gives Fitstop considerable latitude to operate and expand its brand through various channels and locations, potentially impacting a franchisee's market.
This clause is typical in franchise agreements, allowing the franchisor flexibility to adapt to market changes and explore new business avenues. However, prospective Fitstop franchisees should carefully consider how these reserved rights might affect their own business operations and market share within their designated territory.