factual

What rights does Fitstop have if the Prescribed Lease Provisions are included in the Fitstop franchisee's lease?

Fitstop Franchise · 2024 FDD

Answer from 2024 FDD Document

9.3 Lease of Premises.

  • 9.3.1 You are solely responsible for locating, proposing and securing a lease for the Premises we approve in writing prior to you securing the right to occupy and use such Premises for purposes of developing and operating the Franchised Business.
  • 9.3.2 You must ensure that the lease for the Premises (the "Lease") contains and integrates the provisions and covenants set forth in this Section or that we designate in the Manuals at any time prior to you securing any Premises (the "Prescribed Lease Provisions"), with said Lease subject to our review and approval with respect to any markup or negotiated changes to said provisions as part of our overall right to approve the Premises itself.
  • 9.3.3 You must perform and observe at all times the terms (including conditions and covenants) of any lease or other agreement affording you access to and use of the Premises.
  • 9.3.4 You will be liable to pay all amounts owing in connection with the Lease and Premises governed thereby, and your failure to cure any defaults you have with respect to Tenant's (or its guarantors) monetary or non-monetary obligations under the Lease within the applicable cure periods set forth therein shall constitute a material default and, if the Lease is terminated or subject to termination, grounds for immediate termination of this Agreement by us upon written notice to you.
  • 9.3.5 Where you have entered into a lease in respect of the Premises: (1) we may at any time during the Term notify you in writing that we require you to assign the lease of the Premises to us or our nominee; and (2) you must within seven (7) calendar days of such request assign the lease of the Premises to us or our nominee and sign all documents and take all necessary steps to effect the assignment of the lease of the Premises.
  • 9.4 Prescribed Lease Terms. You must use your best efforts to negotiate with the landlord that owns or controls the Premises to integrate the Prescribed Lease Provisions, including a collateral assignment of lease in favor of us in the event this Agreement or the Lease is subject to termination, as specifically set forth in our then-current Manual(s). We may condition our approval or consent to any site you propose as a potential Premises for your Franchised Business on the Lease containing such provisions or substantially similar language affording us the rights detailed in our Prescribed Lease Provisions at the time of such proposal.

Source: Item 23 — RECEIPTS (FDD pages 50–135)

What This Means (2024 FDD)

According to Fitstop's 2024 Franchise Disclosure Document, Fitstop has specific rights when the Prescribed Lease Provisions are included in a franchisee's lease. The franchisee is solely responsible for securing a lease for the premises, and this lease must contain the Prescribed Lease Provisions that Fitstop designates. These provisions are subject to Fitstop's review and approval, including any changes made during negotiation. Fitstop may also condition their approval of a site on the inclusion of these provisions or similar language that grants Fitstop the rights detailed in the Prescribed Lease Provisions.

Fitstop retains the right to require the franchisee to assign the lease to Fitstop or its nominee at any time during the term of the agreement. If Fitstop requests such an assignment, the franchisee must comply within seven calendar days, signing all necessary documents to effect the transfer.

Furthermore, the FDD states that failure to meet the obligations of the lease, such as curing defaults related to monetary or non-monetary obligations, constitutes a material default. If the franchisee fails to cure these defaults within the specified cure periods, and the lease is terminated or subject to termination, Fitstop has grounds for immediate termination of the Franchise Agreement upon written notice to the franchisee. This underscores the importance of adhering to lease terms and the potential consequences of failing to do so.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.