What activities are prohibited under the post-term non-compete agreement for a Stretch Zone franchisee?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 12.5 DISTINGUISHING OPERATIONS
- (a) Non-Competitive Business. If we do not exercise our option under Section 12.4 and you desire to remain in possession of the Premises, you may only operate a business that does not violate your covenant not to compete. You must make all modifications to the Premises immediately upon termination of this Agreement as necessary to distinguish the appearance of the Premises from that of other Franchise Businesses.
- (b) De-Identification. You must immediately remove all identifying architectural superstructure and signage on, about or in the Premises bearing the name or logos of Stretch Zone (or any name or logo similar to Stretch Zone), in the manner we specify. You will hold all property belonging to us for delivery to us, at our expense, upon request. Any signage that you are unable to remove within 1 Business Day of the termination or expiration of this Agreement you must completely cover the signage until the time of their removal. If you fail or refuse to comply with this obligation, we have the right to enter the Premises, without being guilty of trespass or any other tort for the purpose of removing the signage and storing them at another location, at your reasonable expense (for signage not owned by us) payable by you on demand.
- (c) Notice to Customers. Until you complete all modifications and alterations required by this Section, you must maintain a conspicuous sign at the Premises in a form we specify stating that your business is no longer associated with our Business System. You also must advise all customers or prospective customers calling your new telephone number that your new business is no longer associated with our Business System.
- (d) Our Entry Right. If you fail or refuse to comply with the requirements of this Section, we have the right to enter upon the Premises to make all changes as may be required at your expense and at your sole risk. We have no responsibility for any actual or consequential damages to your property or others, and without liability for trespass or other tort or criminal act. You agree that your failure to make these alterations will cause us irreparable injury.
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)
The 2025 Stretch Zone Franchise Disclosure Document outlines some post-termination obligations. Specifically, if Stretch Zone does not exercise its option to purchase the franchise premises upon termination, the franchisee is permitted to remain in possession of the premises, but they must operate a business that does not violate the covenant not to compete. The franchisee must immediately modify the premises to differentiate its appearance from other Stretch Zone franchise businesses.
To ensure there is no confusion that the business is still a Stretch Zone, the franchisee must remove all identifying architectural superstructure and signage bearing the Stretch Zone name or logos. If the franchisee cannot remove the signage within one business day of termination or expiration of the agreement, they must completely cover the signage until it is removed. If the franchisee fails to do so, Stretch Zone has the right to enter the premises and remove the signage at the franchisee's expense.
Furthermore, until all required modifications and alterations are completed, the franchisee must maintain a conspicuous sign at the premises stating that the business is no longer associated with the Stretch Zone system. The franchisee must also advise all customers or prospective customers calling the new telephone number that the business is no longer associated with Stretch Zone. Failure to comply with these requirements gives Stretch Zone the right to enter the premises and make the necessary changes at the franchisee's expense and risk.