What does Article 5 of the Stretch Zone agreement cover regarding the transfer of interest?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 5 - INTELLECTUAL PROPERTY
Section 5.1 OUR REPRESENTATIONS AS TO THE INTELLECTUAL PROPERTY
We represent to you that:
- (a) Ownership. We are the sole owner of the Intellectual Property.
- (b) Protection. We will take all steps necessary to preserve and protect the ownership and validity of the Intellectual Property.
Section 5.2 YOUR USE OF THE INTELLECTUAL PROPERTY
You may use the Intellectual Property only in accordance with standards and specifications we reasonably determine and implement on a Network-wide basis. You agree that:
(a) Limitation on Use. You will use the Intellectual Property only for the operation of your Franchise Business at the Premises.
- (b) Prohibitions. You will not employ any of the Intellectual Property in signing any contract, check, negotiable instrument or legal obligation, application for any license or permit, or in a manner that may result in liability to us for any indebtedness or obligation of yours.
- (c) Sole Business Name. You will use our Principal Trademark as the sole service mark identification for your Franchise Business and will display prominently our Principal Trademark on and/or with all materials that we designate and authorize and in a manner that we specify.
- (d) No Encumbrance. You will not use any of the Intellectual Property as security for any obligation or indebtedness.
- (e) Fictitious Name. You cannot use the Stretch Zone trade name as part of your legal business name. You must comply in filing and maintaining any required fictitious, trade or assumed name registrations for the "Stretch Zone" trade name for example, John Jones d/b/a "Stretch Zone" or ABC, Inc. d/b/a "Stretch Zone," and will sign all documents that we or our counsel deem reasonably necessary to obtain protection for the trademarks and our interest in the trademarks.
- (f) Impairment. You will exercise caution when using the Intellectual Property to ensure that the Intellectual Property is not in any manner jeopardized.
Section 5.3 INFRINGEMENT BY YOU
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, Article 5 does not pertain to the transfer of interest. Instead, Article 5 of the agreement focuses on intellectual property rights. It outlines Stretch Zone's representations regarding ownership and protection of its intellectual property.
Specifically, Stretch Zone asserts that it is the sole owner of its Intellectual Property and will take necessary steps to protect its validity. The agreement dictates how a franchisee can use Stretch Zone's intellectual property, limiting its use to the operation of the franchise business at the designated premises.
The agreement also lists prohibitions, such as using the intellectual property to incur debt or other obligations. Franchisees must use Stretch Zone's Principal Trademark as the sole service mark and display it prominently. Furthermore, franchisees cannot use the Stretch Zone trade name as part of their legal business name but must comply with fictitious name registrations, ensuring the intellectual property is not jeopardized.