Is signing the general release a requirement when Fitstop awards a franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| 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. |
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| i. Franchisee's obligations on termination/nonrenewal | Section 16 | You must: (i) immediately cease use of all our Proprietary Marks, Confidential Information, trade secrets, and all aspects of the Franchise System; (ii) immediately return to us all advertising materials, products, or writing that contain, bear or otherwise use and of the Marks and IP, as well as all materials containing Confidential Information; (iii) pay all outstanding amounts due and owing to us under the Franchise Agreement; (iv) assign all telephone numbers and domain names associated with the Franchised Business to us (at our option) or otherwise cancel any registration for the same; (v) afford us (directly or via an operating affiliate) the right to (a) assume the lease for your Approved Premises, and/or (b) acquire all other operating assets associated with the Franchised Business at net depreciated book value, as detailed more fully in your Franchise Agreement; and (vi) comply with all confidentiality, non-disclosure and other post-term restrictive covenants detailed more fully below in this Item 17 Chart. |
| j. Assignment of contract by franchisor | Section 15.1 | The Franchise Agreement is fully assignable by us. |
| k. "Transfer" by franchisee—definition | Section 15 | Includes transfer of contract or assets or ownership change. |
| 1. Franchisor's approval of transfer by franchisee | Section 15.2 | We have the right to approve all transfers. |
| 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. |
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, signing a general release is not a condition for awarding a franchise. However, it is required in the event of a transfer of the franchise.
Specifically, if a Fitstop franchisee decides to transfer their franchise to another party, both the franchisee and the prospective new franchisee must meet certain conditions. One of these conditions is that the transferring franchisee must sign a general release. This release likely protects Fitstop from any future claims or liabilities related to the previous franchisee's operation of the business.
This requirement is fairly standard in the franchise industry. It ensures a clean break between the franchisor and the outgoing franchisee, and it provides legal protection for the franchisor as a new franchisee takes over the business. Prospective Fitstop franchisees should be aware of this requirement should they ever decide to sell their franchise.