What agreement does Stretch Zone grant a Limited Protected Territory under?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
We grant you a Limited Protected Territory that we define in Section 18.1 of the Franchise Agreement and designate on the Map attached as Exhibit A to the Franchise Agreement, if the Premises exist that we have approved. If the Premises do not exist at this time, we will describe the Limited Protected Territory in the Approved Location Addendum attached as Exhibit D. 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. 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. You may not advertise outside of your DMA.
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 consider appropriate that are not expressly prohibited by the Franchise Agreement, whenever and wherever we or they desire, including:
Minimum Performance Standard. We expressly condition the grant of your Limited Protected Territory upon your successful penetration of the market in your Limited Protected Territory. You agree to promote actively and aggressively the services offered at your Franchise Business within your Limited Protected Territory. Beginning in your 2nd full business year of operation and each full business year thereafter, the Franchise Business must generate at least $240,000 in annual Gross Revenues. To cure this default you must pay us an "Underperformance Fee" equal to 6% of the difference between your actual Gross Revenues and $240,000. If you fail to do this within 30 days on completion of your year-end financial statements, we have the option of exercising any of our rights under the Franchise Agreement including: (i) eliminating your rights in your Limited Protected Territory; or (ii) terminating the Franchise Agreement. This minimum performance standard is not a financial performance representation and does not infer that you will experience Gross Revenues of any particular level.
Source: Item 12 — ITEM -12 TERRITORY (FDD pages 54–58)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, a Limited Protected Territory is granted under the Franchise Agreement. Specifically, Section 18.1 of the Franchise Agreement defines the Limited Protected Territory, and it is designated on a map attached as Exhibit A to the Franchise Agreement, assuming the premises exist and are approved. If the premises do not yet exist, the Limited Protected Territory will be described in the Approved Location Addendum attached as Exhibit D.
During the initial term of the Franchise Agreement, Stretch Zone agrees not to open a company-owned unit or franchise another Stretch Zone location within the franchisee's Limited Protected Territory, with the exception of Non-Traditional Locations, provided the franchisee is not in default. It is important to note that there may be overlap with other units' Limited Protected Territories as long as their physical premises are not located within the franchisee's territory. Franchisees are also restricted from advertising outside of their Designated Market Area (DMA).
However, Stretch Zone retains the right to engage in activities not expressly prohibited by the Franchise Agreement, including establishing units outside the Limited Protected Territory and operating businesses similar or dissimilar to Stretch Zone that are not identified by the Stretch Zone trademarks. They also retain all rights relating to the trademarks and associated products/services, except as specifically stated in the agreement. This includes providing products and services to customers that may be similar to those offered at franchised units, regardless of the method of distribution.
It's also important to note that the grant of the Limited Protected Territory is conditional upon the franchisee's successful market penetration. Beginning in the second full year of operation, the franchise must generate at least $240,000 in annual Gross Revenues. Failure to meet this minimum performance standard requires the franchisee to pay an Underperformance Fee equal to 6% of the difference between actual Gross Revenues and $240,000. Failure to pay this fee within 30 days may result in Stretch Zone eliminating the franchisee's rights in the Limited Protected Territory or terminating the Franchise Agreement.