Must a transferee of a Fitstop franchise execute the then-current Franchise Agreement?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
anchise 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.
- 15.12 Conditions for our approval of transfer include, but are not limited to, the following: (1) you are in full compliance with this Agreement; (2) you pay us all amounts due; (3) transferee and its general managers satisfactorily complete our training program, (4) transferee executes our then-current form of Franchise Agreement; (5) the transfer fee is paid; (6) we approve any written agreements regarding transfer; (7) you supply any additional information we require; (8) you 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 our franchisees; and (9) you sign a general release and other documents we require.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a transferee is generally required to execute the then-current form of the Franchise Agreement as a condition of the transfer. This requirement ensures that the Fitstop franchise operates under the most up-to-date terms and conditions established by the franchisor. However, if the then-current Franchise Agreement is required to be signed by the transferee, no new initial franchise fee will be required, and the term of the franchise will be as established under a new Franchise Agreement.
There are specific conditions that must be met for Fitstop to approve a transfer. These include the franchisee being in full compliance with the existing agreement, payment of all outstanding debts, and the transferee completing the training program to Fitstop's satisfaction. Additionally, both the transferor and transferee must execute any transfer documents required by Fitstop, including personal guarantees, and the transferor must provide an agreement not to divert business from Fitstop and its franchisees.
There are exceptions to the transfer requirements. For instance, a transfer to a corporation wholly-owned by the existing owner(s) may not require Fitstop's approval or the payment of application or transfer fees, provided the transferring owner(s) remain personally responsible for the agreement's performance. Similarly, transfers resulting from divorce proceedings are subject to all transfer terms unless both spouses are franchisees actively engaged in the business operation. These stipulations ensure Fitstop maintains control over who operates its franchises and that the brand's standards are upheld.
Prospective Fitstop franchisees should be aware that involuntary transfers, such as those resulting from legal processes, are not permitted and can be grounds for termination of the Franchise Agreement. Furthermore, using the Franchise Agreement as security for a loan is prohibited without Fitstop's written consent. These restrictions highlight the importance of understanding and adhering to the transfer conditions outlined in the Franchise Agreement to avoid potential breaches and ensure the continued operation of the Fitstop franchise.