When transferring a Fitstop franchise, is the payment of a Transfer Fee required?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
- 15.14 The transfer of this Franchise upon written notice by an individual or partnership to a corporation wholly-owned by the preexisting owner or all preexisting owners of this Franchise shall not require our approval nor the payment of the application or transfer fees.
However, the transferring owner or owners must agree to remain personally responsible to us for your performance of the terms and conditions of this Agreement.
- 15.17 If a court of competent jurisdiction as a part of a divorce, dissolution, legal separation, or other proceeding, orders you to transfer to your spouse all or any part of your interest in this Agreement and/or in a material portion of the real and/or personal property used in connection with the Franchise, such an order will constitute a transfer of this Agreement and will cause the transferee amd transferor to be subject to all terms concerning transfers set forth above.
However, if both spouses are franchisees under this Agreement, such a transfer will not be subject to the transfer requirements herein, unless the spouse to whom this Agreement or the concerned property is being transferred is not actively engaged in the operation of the Franchise, in which case we can declare that the transfer is subject to all transfer terms of this Agreement and may exercise our right of first refusal.
- 15.8.8 payment by you of the applicbale Transfer Fee, as defined and described more fully in this Section;
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a Transfer Fee is generally required for franchise transfers, but there are exceptions. Specifically, a transfer to a named beneficiary or to a spouse or adult child of an individual does not require payment of transfer fees. Additionally, a transfer to a corporation wholly-owned by the preexisting owner(s) also does not require payment of transfer fees, provided the transferring owner(s) remain personally responsible for the franchise's performance.
However, even in situations where a Transfer Fee is not initially required, Fitstop retains the right to reasonably reject the transfer. Furthermore, if a transfer occurs due to divorce or legal separation and both spouses are franchisees, transfer requirements may still apply if the spouse receiving the franchise is not actively engaged in its operation. These stipulations ensure Fitstop maintains control over who operates its franchises and that all operators meet their standards.
In most other transfer scenarios, a Transfer Fee is applicable. The FDD states that conditions for approval of a transfer include the payment of all amounts due, including the transfer fee. The franchisee must also pay all outstanding debts and the transferee must complete the training program. The transferee must also execute the current form of the Franchise Agreement. These conditions are typical in franchising, as franchisors want to ensure that new operators are fully trained and financially stable.