What is the role of the Franchise Agreement in determining when the initial franchise fee is earned for a Fitstop franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Initial Franchise Fee. Please see Item 5 of this Disclosure Document for additional details regarding this initial fee and the terms associated with the same. This amount must be paid in connection with each Franchised Business you are awarded the right to independently own and operate at the time such rights are awarded, and such amounts are deemed fully earned upon payment under your signed Franchise Agreement.
Source: Item 7 — TEM 7: ESTIMATED INITIAL INVESTMENT (FDD pages 15–19)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the Franchise Agreement plays a crucial role in determining when the initial franchise fee is considered fully earned. The initial franchise fee is $50,000. This fee must be paid when the rights to independently own and operate a Franchised Business are awarded.
Specifically, the FDD states that the initial franchise fee is deemed fully earned upon payment under the signed Franchise Agreement. This means that once the agreement is signed and the payment is made, Fitstop has fulfilled its obligation regarding this fee, regardless of whether the franchisee's business is yet operational.
This is a standard practice in franchising, as the initial fee compensates the franchisor for granting the franchise rights, providing initial training, and offering support during the setup phase. A prospective Fitstop franchisee should understand that this $50,000 is non-refundable once the Franchise Agreement is signed and payment is made, so due diligence is essential before entering into the agreement.