Does Fitstop have a right of first refusal to acquire a Fitstop franchisee's business?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| m. Conditions for franchisor approval of transfer | Section 15.11 | Conditions include: you must be in full compliance with your Franchise Agreement; you must pay us all amounts due; transferee and its managers must satisfactorily complete our training program; transferee executes our thencurrent form of Franchise Agreement; you or transferee must pay transfer fee; we must approve written agreements regarding transfer; you must supply us with any additional information we reasonably require regarding the transfer; you must provide, as a personal covenant to the transferee, in addition to your covenants to us, an agreement not to seek to divert business from us and/or our franchisees; and you must sign a general release and other documents we require. Please also see post-term covenants described below in this Item 17 Chart. |
|---|---|---|
| n Franchisor's might of first referri | Section 15.2 | We have a right to acquire your business and so the |
| n. Franchisor's right of first refusal to acquire franchisee's business | Section 13.2 | We have a right to acquire your business under the same terms you are offering to a third party. |
| o. Franchisor's option to purchase franchisee's business | Section 15.3 | You must notify us if y |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop does have a right of first refusal to acquire a franchisee's business. Specifically, Fitstop has the right to acquire the business under the same terms that a franchisee is offering to a third party.
This means that if a Fitstop franchisee receives an offer from a third party to purchase their franchise, they must first notify Fitstop of the offer. Fitstop then has the option to purchase the franchise on the same terms as the third party's offer. This right is detailed in Section 13.2 of the Franchise Agreement.
This clause is important for prospective franchisees to understand, as it gives Fitstop significant control over who can own and operate a Fitstop franchise. While it doesn't prevent a franchisee from selling their business, it does give Fitstop the first opportunity to buy it, potentially limiting the franchisee's options and negotiating power. Franchisees should carefully consider this provision and its implications before entering into a franchise agreement with Fitstop.