Does the Stretch Zone agreement relieve any third person of their obligation or liability to any party to the agreement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee is a Business Entity, to another original equity owners but such transfer does not release the transferring Franchise Owner from her/his obligations under any Guaranty that s/he previously signed.
You understand that, if you transfer this Agreement to a Business Entity, you remain personally liable for all the monetary and non-monetary obligations under this Agreement arising before or after the transfer through the end of the Initial Term and any Renewal Term.
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 franchise agreement does not automatically relieve a transferring franchise owner from their obligations under any previously signed guaranty. Specifically, if a franchisee transfers their agreement to a business entity, they remain personally liable for all monetary and non-monetary obligations arising before or after the transfer, through the initial and any renewal terms.
This means that even if the franchisee sells or transfers their Stretch Zone franchise to another party or business entity, they will still be responsible for fulfilling the obligations outlined in the original franchise agreement and any related guarantees. This responsibility extends to financial obligations, such as royalty payments or debt, and non-financial obligations, such as adhering to brand standards and operational requirements.
This provision protects Stretch Zone by ensuring continued accountability for the franchise's performance, even if the ownership changes. For a prospective franchisee, this highlights the importance of understanding the full scope of the obligations and potential liabilities before signing the franchise agreement and any related guarantees, as these responsibilities may extend beyond the period of direct ownership.