Are there any fees associated with default or termination outlined in Item 6 of the Fitstop FDD?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
OTHER FEES**
| Indemnification | The costs and expenses we incur in connection with your breach or default under your Franchise Agreement or otherwise in the ownership and operation of your Franchised Business. | As incurred by you. | You are solely responsible and must indemnify and hold us harmless for all loss, damage, claims or demands arising from your Franchise including, but not limited to, any joint employment claims. |
|---|---|---|---|
| Annual Convention Fee | We expect this amount to be around $1,500 to $2,000 per attendee | Paid monthly by you. | You will also be responsible for covering the costs that attendees incur in connection with attending any such event. |
| Merchant payment processing costs | Then-current amount charged by our Approved Supplier (if applicable) Currently, these fees are estimated to be between 2% and 4% of Gross Revenue generated by your Franchised Business on an ongoing basis | Payable immediately once collected by the Current Billing/POS Provider | These amounts are payable to our third-party Approved Supplier for such services as of the Issue Date. |
| Interest and/or Late Fees | The lesser of (i) 18% per annum, and (ii) the highest rate permitted for commercial transactions under applicable law | If and as incurred and invoiced | Please note that the maximum interest rate in the State of California amounts to 10% per annum. These amounts may be charged in connection with any fees or amounts that are past due and owing under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Item 6 outlines various "Other Fees" that a franchisee may incur. While the table does not explicitly list a "termination fee," it does state that Fitstop franchisees are responsible for indemnification costs. This means that if a franchisee breaches the Franchise Agreement or defaults, they are responsible for covering the costs and expenses that Fitstop incurs as a result of the breach or default. These costs are incurred by the franchisee.
Additionally, the table in Item 6 mentions "Interest and/or Late Fees." Fitstop may charge interest on any fees or amounts that are past due under the Franchise Agreement. The interest rate is the lesser of 18% per annum or the highest rate permitted for commercial transactions under applicable law. For example, the maximum interest rate in California is 10% per annum.
While not directly labeled as 'termination fees,' these indemnification costs and potential interest/late fees related to breaches or defaults could represent significant expenses for a Fitstop franchisee who fails to comply with the terms of the Franchise Agreement. Prospective franchisees should carefully review the Franchise Agreement to understand the full scope of their obligations and the potential financial consequences of non-compliance.