Are Transfer Fees payable to Fitstop?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
However, all such transfers are subject to our conditions and requirements regarding transfers as set forth herein, including, but not limited to, application, approval by us, payment of the application, transfer, and training fees, the transferee's execution of the then-current Franchise Agreement, and to our Right of First Refusal where applicable.
However, if the transfer is to a named beneficiary or to the spouse or an adult child of an individual, transfer fees are not payable.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, transfer fees are generally payable to Fitstop when a franchise is transferred, but there are exceptions. Specifically, if the transfer is to a named beneficiary, spouse, or adult child of an individual, transfer fees are not payable.
Fitstop requires that several conditions be met for a transfer to be approved, including that the franchisee is in full compliance with the Franchise Agreement, all amounts due to Fitstop are paid, the transferee and its general managers satisfactorily complete Fitstop's training program, the transferee executes the then-current Franchise Agreement, and the transfer fee is paid. Fitstop must also approve any written agreements regarding the transfer, and the franchisee must supply any additional information Fitstop requires. Additionally, the franchisee must provide an agreement not to divert business from Fitstop and its franchisees and sign a general release and other required documents.
Furthermore, a nonrefundable Application Fee of $500 is payable to Fitstop with the notice of any proposed transfer, unless exempted. This application fee will be credited toward the Transfer Fee if the transferee is approved but will otherwise be forfeited to defray Fitstop's expenses in processing the application. The Application Fee is subject to upward adjustment based on changes in the Consumer Price Index. However, if the transfer is an assignment of the Franchise by an individual to a corporation in which the individual remains the majority stockholder and officer responsible for the full-time operation of the Franchise, and the transfer does not result in the cumulative transfer of over 50% of the interests of the original owners, only the Application Fee will be charged without the Transfer Fee.
In cases of transfer upon written notice by an individual or partnership to a corporation wholly-owned by the pre-existing owners, neither Fitstop's approval nor the payment of application or transfer fees is required. However, the transferring owner or owners must agree to remain personally responsible to Fitstop for the performance of the terms and conditions of the Franchise Agreement. Involuntary transfers of the Agreement or the assets of the Franchise are not permitted and are grounds for termination of the Agreement.