After acquiring a business, can Stretch Zone franchise, license or create other arrangements with respect to these businesses, wherever these businesses are located, even within the Limited Protected Territory?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
e you obtain a location that we approve. During the Initial Term, if you are not in default, we agree not to open the premises of a Company-Owned Unit within your Limited Protected Territory or franchise another Stretch Zone Franchise having premises located within your Limited Protected Territory, except for Non-Traditional Locations in the Protected Territory. This does not mean that there might not be overlap with a Company-Owned Unit's or another Franchised Unit's Limited Protected Territory as long as the premises of the Company-Owned Unit or the other Franchised Unit is not physically located in your Limited Protected Territory.
Section 1.4 RIGHTS THAT WE MAINTAIN
We (and any Affiliates that we may have from time to time) will, at all times, have the right to engage in any activities that we or they deem appropriate that are not expressly prohibited by this Agreement, whenever and wherever we or they desire, including, but not limited to:
- (a) establishing and operating, and granting rights to others to establish and operate, on any terms and conditions that we deem appropriate, Units (as applicable) at any locations outside the Limited Protected Territory and Non-Traditional Locations within or outside the Limited Protected Territory;
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
Based on the 2025 Stretch Zone Franchise Disclosure Document, the franchisor retains specific rights that could impact a franchisee's territory. According to Section 1.4, Stretch Zone has the right to engage in any activities they deem appropriate that are not expressly prohibited by the agreement, whenever and wherever they desire.
This means that while a franchisee is granted a Limited Protected Territory, as defined in Section 18.1 and Exhibit A, Stretch Zone retains considerable latitude in its business operations. The only explicit restriction is that Stretch Zone will not open a Company-Owned Unit or franchise another Stretch Zone within the franchisee's Limited Protected Territory during the initial term, excluding Non-Traditional Locations. However, the document clarifies that there might be overlap with other units' territories as long as the physical premises are not within the franchisee's Limited Protected Territory.
Therefore, while the FDD does not directly address the scenario of Stretch Zone acquiring a business and then franchising, licensing, or creating other arrangements with it, the broad rights retained by Stretch Zone suggest that such actions could be permissible, even within a franchisee's Limited Protected Territory, provided they do not violate the explicit restrictions outlined in Section 1.3 regarding the physical location of other franchised or company-owned units. A prospective franchisee should seek clarification from Stretch Zone on how acquisitions and subsequent franchising or licensing arrangements would be handled to fully understand the potential impact on their protected territory.