What section of the Fitstop franchise agreement outlines the franchisor's ability to terminate the agreement with cause?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| d. Termination by franchisee | N/A | No early termination by you. | |--------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | e. Termination by franchisor without cause | N/A | No termination by us without cause. | | f. Termination by franchisor with cause | Section 16.1 | Franchisor can terminate if you are in breach of any term of the Franchise Agreement, if you are in default, if you fail to satisfactorily complete the Training, or if you fail to locate a Premises in the specified period of time. | | g. "Cause" defined—curable defaults | Section 16.2 | We can terminate you for engaging in conduct that reflects unfavorably on the operation and reputation of the Franchise System and if you fail to cure such default within 24 hours of our notice to you. The following defaults, if not cured within 30 calendar days after we have given you written notice, may result in termination: failure to comply with any provisions of the Franchise Agreement or other agreement between us and you; failure to pay any monies due us or suppliers when due; entering into a contract with or take payment directly from a customer without our approval; failing to submit required financial information to us or a government entity or making false statements about your financial statements to us or a government entity; failing to pay all taxes and employee related withholdings relating to the operation of your franchise; failing to keep your business entity active and in good |
| h. "Cause" defined—non-curable defaults | Section 16.1 | Non-curable defaults include being convicted of, pleading guilty or no contest to, or receiving deferred adjudication for a felony, crime of moral turpitude, or certain other crimes; attempts to hack or crack our computer software; disclosure of confidential information; abandonment; unauthorized transfer; material misrepresentations when you purchase the franchise; repeated failure to comply with Franchise Agreement or Manual requirements, even if corrected; or if you are declared insolvent or bankrupt.
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, Section 16.1 of the franchise agreement outlines the franchisor's right to terminate the agreement with cause. Fitstop can terminate the franchise agreement if the franchisee breaches any term of the agreement, is in default, fails to satisfactorily complete the required training, or fails to secure a suitable premises within the specified timeframe.
Furthermore, Section 16.2 details that Fitstop can terminate the agreement if the franchisee engages in conduct that reflects negatively on the operation and reputation of the Fitstop franchise system, and fails to correct the issue within 24 hours of receiving notice. Other defaults that may lead to termination if not corrected within 30 calendar days after written notice include failure to comply with any provisions of the Franchise Agreement, failure to pay monies due to Fitstop or its suppliers, entering into unapproved contracts with customers, failing to submit required financial information or making false statements, failing to pay taxes, or failing to keep the business entity active and in good standing.
In addition, Section 16.1 also specifies several non-curable defaults that can lead to immediate termination. These include being convicted of a felony or similar crime, attempting to hack Fitstop's software, disclosing confidential information, abandoning the franchise, unauthorized transfer of the franchise, making material misrepresentations when purchasing the franchise, repeated failure to comply with the Franchise Agreement, or insolvency/bankruptcy. This level of detail is typical for franchise agreements, as it protects the franchisor's brand and system standards while also informing franchisees of the specific actions that could jeopardize their franchise agreement.