Who does a franchise broker represent when assisting in the sale of a Pump It Up franchise?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) if the proposed transferee comes through an investigation process with a franchise sales broker that we have retained, then the transferee must pay our then-current Initial Franchise Fee instead of the Transfer Fee.
This enables us to pay the additional costs we incur with a franchise sales broker, including the payment of the broker's commissions.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to the 2025 Pump It Up Franchise Disclosure Document, a franchise sales broker retained by Pump It Up represents the franchisor, not the franchisee or potential transferee. This is evident in the context of franchise transfers, where if a proposed transferee is found through a franchise sales broker retained by Pump It Up, the transferee is required to pay the then-current Initial Franchise Fee instead of the Transfer Fee. This arrangement enables Pump It Up to cover the costs associated with the broker, including their commissions.
This arrangement is fairly typical in franchising. Franchise brokers are generally engaged by the franchisor to help find and vet suitable candidates for new or existing franchise locations. Their fees are typically structured so that the franchisor pays the broker a commission upon successful completion of a franchise sale.
For a prospective Pump It Up franchisee, this means that the franchise broker's primary allegiance is to Pump It Up. While the broker can provide information and guidance to the potential franchisee, their ultimate goal is to find a qualified candidate who will be approved by Pump It Up. Therefore, it is crucial for the prospective franchisee to conduct their own due diligence and seek independent advice from legal and financial professionals before making any decisions.