Does Fitstop reserve the right to establish and operate other franchised businesses outside of a franchisee's designated territory?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
We reserve all rights not expressly granted to you. These include the right to: (i) establish and operate, and license any third party the right to establish and operate, other Franchised Businesses using the Marks and System at any location outside of your Designated Territory; (ii) market, offer and sell products and services that are similar to the Approved Products and Approved Services offered by the Franchised Business under a different trademark or trademarks at any location, within or outside the Designated Territory; (iii) use the Marks and System, other such marks we designate, to distribute our Approved Products and/or Approved Services (including private label products that we may develop in the future) in any alternative or dissimilar channels of distribution, within or outside the Designated Territory (including by electronic means, such as the internet and by websites we establish, direct mail, wholesale stores, etc.); (iv) engage in any transaction, including to purchase or be purchased by, to merge or combine with, to convert to the System or be converted into a new system with any business, including such businesses operated by competitors or otherwise operated independently or as part of, or in association with, any other system or chain, whether franchised or corporately owned and whether located inside or outside of the Designated Territory, provided that in such situations the newly acquired businesses may not operate under the Proprietary Marks in the Designated Territory; and (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 your Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 35–37)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop retains specific rights regarding the establishment of other franchised businesses. Fitstop explicitly reserves the right to establish and operate, or license to third parties, other Fitstop franchises outside a franchisee's designated territory. This means that while a franchisee is granted a specific 'Designated Territory,' Fitstop is not restricted from expanding its brand presence beyond those boundaries.
This reservation of rights has significant implications for potential Fitstop franchisees. It means that Fitstop could potentially authorize new franchises in areas adjacent to or near a franchisee's territory, which could lead to increased competition. The FDD also states that Fitstop can market and sell similar products and services under different trademarks both within and outside the designated territory. This clause further emphasizes that the franchisee's territory is not exclusive, and Fitstop retains considerable control over market expansion and product distribution.
Furthermore, Fitstop reserves the right to use its trademarks and system to distribute approved products and services through various channels, including the internet, direct mail, and wholesale, both within and outside the franchisee's designated territory. This broad reservation of rights underscores that a Fitstop franchisee's rights are limited to the physical location they operate and do not extend to exclusive market control or protection from other distribution methods employed by Fitstop. Prospective franchisees should carefully consider these reserved rights and their potential impact on their business's market share and profitability.