Under what conditions can the Fitstop franchisor terminate the Franchise Agreement with cause?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| d. Termination by franchisee | N/A | No early termination by you. | |--------------------------------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | e. Termination by franchisor without cause | N/A | No termination by us without cause. | | f. Termination by franchisor with cause | Section 16.1 | Franchisor can terminate if you are in breach of any term of the Franchise Agreement, if you are in default, if you fail to satisfactorily complete the Training, or if you fail to locate a Premises in the specified period of time. | | g. "Cause" defined—curable defaults | Section 16.2 | We can terminate you for engaging in conduct that reflects unfavorably on the operation and reputation of the Franchise System and if you fail to cure such default within 24 hours of our notice to you. The following defaults, if not cured within 30 calendar days after we have given you written notice, may result in termination: failure to comply with any provisions of the Franchise Agreement or other agreement between us and you; failure to pay any monies due us or suppliers when due; entering into a contract with or take payment directly from a customer without our approval; failing to submit required financial information to us or a government entity or making false statements about your financial statements to us or a government entity; failing to pay all taxes and employee related withholdings relating to the operation of your franchise; failing to keep your business entity active and in good |
| 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.
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, Fitstop can terminate the Franchise Agreement with cause under several circumstances. These include any breach of the Franchise Agreement's terms, being in default, failing to satisfactorily complete the required training, or not securing a suitable premises within the specified timeframe. These conditions provide Fitstop with broad authority to terminate the agreement if a franchisee fails to meet their obligations.
Furthermore, the FDD outlines specific non-curable defaults that can lead to immediate termination. These include conviction of a felony or crime of moral turpitude, attempting to hack Fitstop's computer software, disclosing confidential information, abandoning the franchise, unauthorized transfer of the franchise, making material misrepresentations when purchasing the franchise, repeated failure to comply with the Franchise Agreement or Manual requirements (even if corrected), or being declared insolvent or bankrupt. These defaults are considered severe enough to warrant immediate termination without an opportunity to correct the issue.
Additionally, Fitstop can terminate the agreement if a franchisee engages in conduct that reflects unfavorably on the operation and reputation of the Fitstop Franchise System. In this case, the franchisee has 24 hours from the notice to correct the issue. If the franchisee does not resolve the issue within 30 calendar days after receiving notice from Fitstop, Fitstop has grounds for termination. This clause highlights the importance of maintaining the brand's reputation and adhering to operational standards, with swift action required to address any negative impact.