For a Stretch Zone Area Development Agreement, when is the Development Fee released?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the rights granted to you, you will not pay to us the Development Fee until we have complied with all of our pre-opening obligations to you under a Franchise Agreement for the 1st Franchise Business and you are open for business.
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)
According to Stretch Zone's 2025 Franchise Disclosure Document, the standard Area Development Agreement states that the Development Fee is not paid until Stretch Zone has met all pre-opening obligations for the first franchise location and the location is open for business. This means a prospective area developer will not be required to pay the development fee upfront. Instead, the payment is deferred until certain milestones are achieved. This arrangement potentially reduces the initial financial burden on the developer.
However, there are addenda to the Area Development Agreement that address specific state laws. For example, in California, the collection of all initial fees, including development fees, is deferred until Stretch Zone has completed all pre-opening obligations and the unit is open for business. This deferral applies to each specific unit within the development schedule. Similarly, in Hawaii, the Development Fee is not paid until Stretch Zone has complied with all pre-opening obligations for the first Franchise Business and it is open for business.
In Minnesota, all Development Fees and initial payments by Developers are deferred until the first Franchise under the Area Development Agreement opens. In North Dakota, the Development Fee is not paid until Stretch Zone has complied with all of its pre-opening obligations under a Franchise Agreement for the 1st Franchise Business and the franchisee is open for business. These state-specific addenda ensure compliance with local franchise laws, particularly regarding initial fee collection and franchisee protections. Prospective developers should carefully review the addendum applicable to their state to understand the specific terms of fee deferral and other legal requirements.