Must a Fitstop transferee execute the then-current form of the Fitstop Franchise Agreement as a condition of transfer?
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 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a condition for the franchisor's approval of a transfer is that the transferee must execute the then-current form of the Fitstop Franchise Agreement. This requirement is outlined within the broader context of conditions that a franchisee must meet to gain approval for transferring their franchise.
This stipulation means that anyone buying a Fitstop franchise must agree to the latest version of the franchise agreement, which may differ from the agreement the original franchisee signed. This could include changes in fees, operational requirements, or other terms. The transferee will be bound by these updated terms if the transfer is approved.
For a prospective transferee, it's crucial to carefully review the current form of the Franchise Agreement before proceeding with the transfer. Understanding any changes or new obligations is essential to making an informed decision. Additionally, the original franchisee needs to be aware that the transfer is contingent on the transferee's acceptance of the new agreement, which could potentially affect the sale.