Can Stretch Zone or its Affiliates derive revenue from a Stretch Zone franchisee's purchases and leases?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Tenant/Franchisee defaults under the Lease, the Franchisor may (but is under no obligation to), within 30 days after receipt of written notice from the Landlord, cure the default (or a longer period of time if the default is not capable of being cured within 30 days and the Franchisor is diligently proceeding to cure the default).
If the Franchisor cures the Tenant/Franchisee's default, the Franchisor has the right to occupy the Premises and operate the Franchise Business.
The Tenant/Franchisee is deemed to have assigned the Lease to the Franchisor, but the Tenant/Franchisee and any guarantors are not released from their obligations under the Lease.
From and after the deemed assignment, the Franchisor will assume and perform all of the obligations of the Tenant/Franchisee under the Lease until the Franchisor is released in accordance with Subsection 4(b).
- (b) The Franchisor may assign the Lease to another Stretch Zone Franchisee with the Landlord's written approval of the new tenant/franchisee.
The Landlord will not unreasonably withhold, delay or condition its approval of the new tenant/franchisee.
Upon the permitted assignment by the Franchisor to the new tenant/franchisee, the Franchisor is released from all further obligations under the Lease.
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, there is no explicit information provided that states Stretch Zone or its affiliates will derive revenue from a franchisee's purchases and leases. However, the document does state that if a Tenant/Franchisee defaults under their lease, Stretch Zone has the right to cure the default and subsequently operate the Franchise Business. In such a scenario, the Tenant/Franchisee is deemed to have assigned the lease to Stretch Zone.
Following the assignment of the lease due to default, Stretch Zone assumes all obligations of the Tenant/Franchisee under the lease until Stretch Zone is released. Stretch Zone also has the option to assign the lease to another Stretch Zone franchisee, contingent upon the Landlord's written approval of the new tenant/franchisee. Upon this permitted assignment, Stretch Zone is released from further obligations under the lease.
While the FDD outlines Stretch Zone's rights and responsibilities regarding the lease in the event of a franchisee default, it does not specify whether Stretch Zone or its affiliates receive revenue from franchisee purchases or leases under normal operating conditions. A prospective franchisee should seek clarification from Stretch Zone regarding any potential revenue streams Stretch Zone or its affiliates may derive from franchisee purchases or leases.