Under the Fitstop agreement, what must a franchisee certify and warrant regarding owners, shareholders, members, managers, partners, officers, and directors?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Section 10: Ownership and Management of the Franchised Business
- 10.1 You identify in Schedule 1 to this Agreement the identity of and other necessary information related to your Principals. You certify and warrant that all of the Franchise's owners, shareholders, members, managers, partners, officers, and directors listed in Schedule 1, will execute the Guaranty attached as Schedule 3 to this Agreement, and will execute such other documents as necessary.
- 10.2 If you are a business entity, then you must: (i) identify each individual or other entity that owns or holds any ownership interest in the Franchisee in Schedule 1 (each, a "Franchise Owner" or "Principal"); and (ii) ensure each Franchise Owner executes the form of Personal Guarantee attached to this Agreement as Schedule 3 (the "Personal Guaranty" or "Guaranty").
- 10.3 The individual you identify in Schedule 1 as the "Franchise Operator" shall have authority to speak for and bind you in all matters pertaining to the operation of the Franchise.
- 10.4 You warrant to us that we may rely on the authority of the Franchise Operator until such time as you notify us in writing by a majority vote of those with an ownership interest in the Franchise that you have assigned a different owner with no less than a 25% ownership interest in the "Franchisee" as the Franchise Operator with respect to the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee must identify their Principals in Schedule 1 of the Franchise Agreement, providing necessary information about them. The franchisee must certify and warrant that all owners, shareholders, members, managers, partners, officers, and directors listed in Schedule 1 will execute the Guaranty attached as Schedule 3 to the agreement, and any other necessary documents.
This requirement ensures that all individuals with a significant stake or role in the Fitstop franchise are legally bound to the agreement's terms and conditions. By having these individuals execute a guaranty, Fitstop aims to secure their commitment to the franchise's obligations and performance. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.
The franchisee must also ensure that if they are a business entity, each individual or entity owning an interest in the franchise executes the Personal Guaranty attached as Schedule 3. Furthermore, the individual identified as the 'Franchise Operator' in Schedule 1 has the authority to represent and bind the franchisee in all matters related to the franchise's operation. Fitstop can rely on the authority of the Franchise Operator until the franchisee provides written notice of a change, with a majority vote of those holding an ownership interest, assigning a different owner with at least a 25% ownership stake as the new Franchise Operator.